detail in the problems that we saw in the lack of communication between the pieces of the service, the letters that were brordout that were overly >> how many employees would have been associated before and taferttralization? >> i'm not sure of the question? >> the number of employees associated with the applications were greater before the centralization. is that accurate? >> it might be. i don't know the answer. it might have been the same number of people but they were centralized versus spread out. >> it was mentioned earlier in testimony in questions that donor lists were requested by the i.r.s. is that accurate? >> that's accurate. in some cases. not all these cases by any stretch of the imagination. >> and the acquisition of those lists ever lead to additional

or did those lists trigger any further inquiries? no. i believe what happened is when disgust he paper, we s -- discussed it. . donors may be rellvapt but not asked in every case. if a donor has a contract with the organization, if the donor is doing it for a political purpose. but to just ask for donors without a rationale shouldn't be done. when we saw that it happened, we asked that if they hadn't sent them in we reached out and said don't. if they had, we said we're not going to use these and we didn't. you'll not find them used in any of these cases. there was something -- i don't know how many of these cases there were. maybe 30 or something like that. i could be wrong on that. more than half were not tea

party cases that got these list requests by the way. but going back, it was overly broad. it was not necessary. >> thank you. >> i'll ask you the same question. in the case where donor lists were requested was it your finding that those lists perhaps triggered further inquiries? >> well, i don't have an answer to that aspect of your question mr. smith. i do know that 27 donor lists were requested. on the iller, safeguards against bias, the underlying concern in this entire situation is that bias was applied. can you share whether there were safe guards in place that were not honored to try to prevent the bias before this situation came about? >> so obviously i don't think -- and again, whether it was

bias or perception of bias will play out over time. let me tell you that we have something on the exam side of the house that has worked remark blue well and that is before anybody gets selected for examination by reason of political activity it goes through a committee. so no one person can do this. so and that cuts down on the bias wefment do a better job of precisely explaining why we're doing it. on the determ side, less so. so what we've done is elevated the issuance of the criteria to a higher level in the organization. >> thank you. >> mr. george. >> i would point out of the 27, 13 were from tea party groups of the donor lists. >> all right. thank you. time has expired. mr. davis is recognized. >> thank you very much mr. chairman and i want to thank both of you jement for being here. everybody that i've heard make a statement or comment, every reviewing body that has had an

opinion have suggested that obviously there was some behavior on the part of senior level i.r.s. staff that was unwarranted, unacceptable, intolerable, and of course should never happen again. it's also clear that there have been management challenges such as who has the authority to do what relative to policy as well as operational procedures. mr. george, let me ask you. when did the you start the audit? >> our audit, sir, began with a request from a congressional staff member in -- i want to give you the exact date, sir. and i do have that here.

march 1 of 2012 is when we were initially contacted by a government reform staff member roughly dit began in may or march rather of 2012. i mean, we had meetings prior to that but i would point to march of 2012. >> mr. miller, when did you first learn of the audit or know about the audit? >> sometime in that same timeframe. it would have been in march. we certainly were aware that they were taking a look at this at some juncture at that time. >> so you knew that this was under way pretty much from the beginning? >> i did. >> and did it ever occur perhaps to have certain kinds of conversations, interactions

with whoever would be etermined as your superiors? >> i mean, i'm sure mr. shulman knew. i'm not sure that anybody above mr. shulman knew. > let me ask you mr. george, during your investigation we've heard all kinds of allegations. as a matter of fact some people have even been suggesting that a good thing to know is who is going to be the next person to go to jail. who is going to be indicted. during your investigation, did you or was it reported to you by in of -- any of your investigators that there was any apparent criminal intent or activity on the part of these employees?

>> nothing out of the review -- the initial review of the audit to that effect, mr. davis. but there will be subsequent review on our part on this matter. >> you know, after listening to all of the discussion and reading all of the information that i've read, i am not convinced that this is a great conspiracyy. con i would admit that there has been some inept tude, there has been some lack of serious management procedures used and adhered to. let me ask both of you since you've had considerable experience with the internal revenue service, what would be your recommendations to the new ommissioner coming in?

>> there's no question that this is damaged the reputation of this organization and the new commissioner needs to take steps to ensure that we've restored that trust that's so essential. and that's where he or she should take action. >> george? >> and i would point out, sir, and this is one of the recommendations that we make. training is necessary at all levels on repeated basis of i.r.s. staff and especially in terms of the political season you have a lot of turnover especially at lower levels at the i.r.s. and people simply need to know and to be kept up to date of the new regulations and requirements. >> thank you very much. i yield back. >> mr. shock is recognized. >> thank you, mr. president. let me begin by saying that i am most concerned that the i.r.s. attempted a week ago to

clean up and apologize i have with me a document detailing a number of pro-life organizations throughout the ountry which in application to 501(c)(3) status were given bias and repression of their constitutional rights. i'm going to submit these documents detailing what they went through to the treasury inspector general for tax administration, asking for a

reply to this committee about the degree of abuse these organizations received during their application. would highlight a few is that an appropriate question to ask? >> i'm not going to be able to speak to a specific development letter in a specific case.

i don't know that i can do that. >> let me ask you about another letter that was received. this one in iowa. the question specifically asked from the i.r.s., please detail the content of the members of your organization's prayers. would that be an appropriate question to a 501(c)(3) applicant? >> the content of one's prayers? >> it pains me to say i can't speak to that one either. >> you don't know whether that would be an appropriate question to ask? >> speaking outside of this case, which i don't know anything about, it would surprise me that that question was asked. >> and finally, during another applicant's conversation or back and forth they were asked specifically, please detail certain signs that may or may not be held up outside of a planned parenthood facility. would that be an appropriate followup to an applicant?

>> i don't know the context would be but that doesn't sound like the usual question. >> thank you. well, hopefully mr. george and the inspector general's office can enlighten us. mr. george, during your investigations, are you aware of the three letters submitted by senators baucus, schumer and doiben written to the i.r.s., asking them to give extra scrutiny to 501 c 4 applications? >> i am aware of it but i don't know the details soir. >> so in your investigation so far in questioning employees of the i.r.s., did you ask them specifically whether or not these letters from sitting united states senators influenced or impacted their decisions around these cases? >> i do not believe that was part of the inquiry. >> will you ask those questions in the future? >> i will ask that if appropriate we will certainly do so if appropriate.

> thank you. >> mr. chairman, i am particularly troubled by some on this committee who seem to want to rationalize or justify the inappropriate behavior by the i.r.s. in these cases by their disagreement with the citizen united ruling of our supreme court. i think we all know that our nation is a nation of laws and we either abide by those laws or not. to our peril. and whether we agree with the citizens united ruling or not should not be justification for this agency, which is charged with upholding the rule of law eektably for all people in all groups regardless of party affiliation or motive. specifically, mr. miller, i was troubled by your comment that you found this grouping, mr. george, with the inspector

general's office called it targeting, to be inappropriate but not illegal. i'm wondering if you can give me examples of other targeting within the i.r.s. that you're aware of that would be inappropriate but not illegal. >> sir, i should tell you that i don't know -- it's my belief that what happened here wasn't illegal but i suppose there are some facts that might come out that would indicate otherwise. but it's not my area. i don't know. but it certainly was inappropriate no question. i'm unaware. we have used listings elsewhere. >> can you give me an example? >> credit counseling would be one of those. >> time has expired. ms. jenkins is recognized. >> thank you, mr. president. we've heard a lot of outrage, a lot of anger and disappointment but i have to tell you after sitting here for a couple hours

i'm sad and i'm sick to my stomach. that americans could be targeted by a government agency based on their political beliefs. . miller, in response to congressman muneezz, you mentioned that you had a discussion with someone at treasury regarding to report. can you give us more details about when that conversation occurred and with whom. >> so i don't know the precise date but it would have been very recently after the report was done and i think mr. george can speak to when he indicated to some parts of treasury as well. it might have been in the same timeframe. >> would that have been the first time you would a discussion with someone from treasury about this situation? >> this situation being the listing and the treatment of these cases?

>> correct. >> i think so. >> so out of all the news reports that have come out in the last couple years, there was never a discussion at i.r.s. with treasury about the situation? until just recently? >> you asked the question was the report. and the report was described and discussed with them recently. i don't believe the specifics were described or discussed with them earlier but i don't know that. they weren't by me i don't think. >> who was your conversation with? >> i would have talked at some point to mr. patterson, the chief of staff. and subsequent to mr. george's discussion with mr. rollen. >> you spoke with who? >> mr. wolen. >> and how did that conversation go? what did treasury have to say?

>> we just talked through the troubling nature of the reports. i indicated that we had worked on fixing the problem. and that's what we talked about. >> they didn't give you any advice and dounl on how to move forward? >> no. >> ok. mr. george, how often do you meet with treasury leadership and i.r.s. leadership regarding open audits? >> with i.r.s. leadership, we meet monthly with the commissioner or acting commissioner on a standing basis and then we'll have communications as necessary. the secretary holds a monthly meeting with bureau heads and in conjunction with those meetings i meet monthly with the general counsel of the department of the treasury and as-needed basis with the deputy secretary mr. wolen. >> when did you first alert

treasury leadership and i.r.s. leadership about this specific audit? -- alerted commissioner then commissioner shulman on may 30, 2012. i subsequently alerted the general counsel of the department of of the the treasury on june 4, and subsequently -- and i do not have the exact date -- alert it had deputy secretary kneel wolen about this matter and then upon his assumption into the position i mentioned it to secretary lieu. >> so may 30 would have been the first time that mr. shulman would have known about the troubling allegations? >> from my perspective. i would assume that people within the internal revenue service would have given him a heads up but i can't say that

for certain. >> ok. in your report, you indicate that the decision to target americans based on political beliefs were made only within the i.r.s.. how did you determine that? >> these were through interviews with i.r.s. staffers both in cincinnati, ohio, as well as in washington, d.c. at the headquarters of the determinations unit and their -- the organizations unit. >> so did you interview mr. miller? >> we did not interview mr. miller. >> so how would you know -- did you interview anyone at treasury? >> we did not. and the reason for that is because at the time of our interviews we had no indication because this was an ongoing matter and we didn't have any indication from those initial interviews that they were implications in this matter. >> so had anyone given you any

indication that you needed to visit with someone higher, you would have had the authority to do so? >> most definitely. >> time has expired. mr. paulson is recognized. >> this has been a bad week for the president or a bad week for the administration but i will tell you after hearing additional tome this morning myself that this is a bad week for america. that's the bottom line. and when supposedly neutral actors in our government choose sides and the results end up being highly crosive to our democracy, this is a violation of the trust of the american people. mr. george, your report indicated and you've testified that the i.r.s. improperly required donor lists. that's a concern from the perspective of the pattern of behavior at the i.r.s. based on the report from delays of applications and targeting and also the disemination of confidential information. but how long did the i.r.s. --

because you acknowledged this just earlier, from 27 different organizations. how long did the i.r.s. have in its possession these improper lists that they shouldn't have had in their possession? congressman, they did not indicate and we did inquire the length of time that they maintain that information but again that they did acknowledge that once they realized they should not have collected it they destroyed it. but i do not have a direct answer as to how long they held on to it. >> do you know how long the lists were in the i.r.s.'s possession? >> i don't know. and i looked. they were -- the letters were bad. they were just way too broad. should they ask asked for them? probably not. was it bad intent or bad management? my guess and my understanding bad management.

when we found out about it we reached out to people who hadn't sent them yet and we told them don't send them. we went to people who had sent them and told them we're not going to use them unless we need to. and we didn't. and at that point my understanding is that we did not use them in any of those cases and they're not being retained. they would have been destroyed in the ordinary course of our records retention rules. >> mr. george were you able to confirm that the lists were actually destroyed? and if so how? >> it's through the testimony, the interviews that were conducted by our audit ors. now i have to admit that was not done under oath but we have to go by what we were told by the employees. >> mr. george, do you have any idea how many donors were involved? >> again, 27 is my understanding of the list of donors requested within the dist i'm not sure but

as i pointed out 13 of the 27 were from tea party groups. >> ok. mr. miller, let me ask this is it i.r.s. practice to ask about a group's relationship with a specific person who is not a part of the organization that is applying for nonprofit status as a part of an application process? >> it can be depending on the facts based on is there a contract tull relationship that could be an issue, is there undue influence going on in some fashion that, for example, we would be looking at private benefit, the one other thing i want you to know that the lists -- because i want to make it clear. 13 were tea party but i believe, my numbers are just a little different. but the tea party ones include nine, 12 patriots. the listings folks were the minority of the people who got

the donor questions. >> i just want to clarify the record there. >> sure. has the i.r.s. ever asked the question of an individual what's your relationship with john doe when they ask an organization? is that a common practice? >> i'm sorry? can you rephrase that? >> mr. tiebery was going down a line of questioning earlier about a lengthy process of a questionnaire filed with the organization tand i.r.s. had asked a question provide details regarding your relationship with this individual. is that a common practice? does the i.r.s. normally do that? >> i don't know what we're talking about there and it's on an individual case and i should not and cannot speak to an individual case sir. >> would it be safe to say that knowing that that's probably inappropriate would there be rep cushions or some sort of discipline that might be followed up if that was determined to be inappropriate? in that type of a question? >> itld depd on the

context. and i don't have the context and why it was asked and was it -- was it a lack of controls and was it a mistake. or was it something different than that? > thank you. >> mr. miller, let's go back to the i.r.s. planned and question issue. when was cecilia rodey told to ask the question? >> i don't have exact knowledge on that. i did not doo that. >> who told her to ask the question? >> i don't know exactly. i'm not sure. it might have been lowice but i'm not sure. >> what did you tell her about the background of the shi? >> who? >> rodey. >> i did not have any conversations with cecilia. >> did anyone give her an advanced copy of the ig's report? >> i did not have those conversations but i would be shocked if that happened.

rfer and how long did she know about the report before the committee knew? > again, you would have to ask with the people who had the conversation but again it would shock me if she knew anything before she had the conversation with whom ever she had it with. >> on march 28, i wrote the commissioner a letter that basically asked him whether local tea party groups in my district were being harassed or given lengthy questionnaires and were being discouraged from seeking tax exempt status. that was march 28. on june 22nd, i got a letter from mr. grant that basically gave me a lot of assurances that nothing like that was taking place and that nothing out of the ordinary was going on and that they were following just regular order. then following a time line,

shortly after my first letter -- shortly before my first letter mr. buse tanny asked in a hearing, an oversight hearing if there was anything going on over at i.r.s. about these applications. and he was told by the commissioner shulman, i can give you assurances there is absolutely no targeting going on. following that same time line on july 25th, we had another oversight committee hearing in which commissioner miller and i had an extended conversation about this very subject. and that conversation is in this transcript. anyone can get this on the sbrept and can read the questions. but the questions were very specifically about tea party groups and their difficulties in getting their tax exempt status,

the lengthy conversations that they were having, the questionnaires that they were having to answer, and again mr. miller in that exchange that you and i had i came away from that with i felt the assurances by you and your office that there were no extraordinary circumstances taking place. and that this was just a backlog and there was nothing going on. mr. miller, was that your impression of the hearing that day? >> no, sir. what i said then and what i understood your question to be was again we divide this in two. the selection process and what was going on at the time of your question. at the time of your question what was out in the public dome main and what i thought we were discussing was the letters. as you called the question nares. those were the overbroad letters that had been referred to continuously here. again, i stand by my answer

there. there was not -- i did talk about the fact that we had centralized, i believe. i have to take a look at it. but i was talking about the fact that we had fixed that problem. >> but at that time you knew by that time that there were lists being made, there were delinations, there was discrimination going on. and that there were steps being taken to try to correct it. but you knew that it was going on at that time. >> we had corrected it. at that time my assumption was they were going to be done with their report that summer. i was not going to go there because i did not have full possession of all the facts, sir. >> well, this is a list of questions that in my case my local northeast county tea party was sent and it's a list that most taxpayers would not answer and most taxpayers should not have to answer.

but it asks questions that should have never been asked. a printed copy of every page of your website, every tweeted from your tweeter account. every personal resume from all your board members. copies of every >> it has limited your ability to educate the public. can i find out as a member of congress, the groups in my district that have applied for and has been denied or there plication continues to be in uspension?

>> the application until it's done is 5301 information. if it is approved then everything becomes public. they can grant you the ability to see that can happen. >> i yield back. >> time has expired. >> yes, i think there will be restrictions on me sharing that. >> thank you, mr. chairman. i want to go back to what he said a few minutes ago. if as i listen to this testimony and having read the report and multiple sources of information that are now coming out, guy to the tell you that the trust -- the trust for the i.r.s. to begin with was already shaky by the american people.

i know whenever someone gets any piece of information from the i.r.s. it doesn't feel good and they are not confident either before this happens they are going to be treated fairly. what has happened here is -- if i were sitting at home watching this on c-span i would be questioning, again, there doesn't seem to be clarity here. how can i just? let me go back to as i'm listening to your testimony and your opening remark, you refer this to as foolish mistakes then you acknowledge there was abuse. so this is more than foolish mistakes. this was abuse. then you said that the applicants were dealt with fairly. then you turn around and said swering mr. o'neil there was there was political activity and

politicians is where we ask questions in these kinds of applications. i want to go to page number six. it talks about the words that were used like tea party and patriots and another point in time issues cluing government spending, debt taxes, public advocates and lobbying to make america better. i want to know if you said, yes, there is a test and politics are always where we ask questions any time there is an application. can you give me some other words that would have been used beside what appears to be all conservative questions. was there a progressive we should look for anything in the application that says progressive? was that anywhere? >> so i think what -- i will refer to mr. george's statement,

i believe his statement indicated that what my understanding is, which is this was not the only thing that our folks were looking at as they scanned -- >> you're not answering my question. was there anything in this criteria that was outside of what i'm seeing in this report that would have indicated to me that other than conservative groups who were applying for this status, that you have a word in there anywhere to say, ok, this test and this is political. we always look at political. where is the word progressive? >> i'm not arguing that the list is bad and it is conservative based. >> then i would say it is targeted. you can't have that both ways. that is targeting and there is 16 times in this report that says there was targeting. so i believe that as you're

giving this testimony that you can't have that both ways. now, there's also in effective management that is talked about in this report. even if you get outside of this and say, ok, there was no targeting. i want to know how a couple of employees that are considered low-level couldville done what was done here? because this says to the american people that out of thousands of employees that you have at the i.r.s. there sin effective management and nobody is watching this if this was noted in 2010. 2013, we're just finding out about this, that certainly is ineffective management. there should have been somebody overlooking this that said this must stop and i'm going to come back in 30 days to make sure it stops. but it continues and continues and now we have 400 application, some over three years. is is more than just

mismanagement. i want to come to you mr. george. you told ms. jenkins that you told the general council of the treasury on june 4. >> correct. >> you could not recall the exact date that you told the deputy secretary. do you recall if it was soon after informing the general council? a week, a month? >> i cannot give a time frame but i can say it was shortly there after? >> it is possible to get that date? >> you feel, i don't keep a date planner but i will do my best. if i have it i will submit it. >> mr. reed is recognized. i'm sorry, time has expired. >> i'm sorry, thank you, mr. chairman. >> thank you, mr. chairman. mr. miller and mr. george, we have sat here for quite some

time and this is offensive. this is offensive to hear this testimony. what i like to do i know you're disagreing with the word targeting, mr. miller, the american people will make that determinations and i will give this a name its is the i.r.s. targeting game. we're going keep on this until we're done. as you it is here today. you were not fired from your job. in my private experience you would have been fired on the spot. all you were allowed was to resign and retire? now you're come here and somehow try to say i did the honorable thing by falling on my sword whening in bad is going to happen to you. you're going to get your full benefits and everything associated with your retirement as an i.r.s. employee. >> nothing bad is happening to me? >> financially. you're allowed to retire. that is the level of accountability.

you came here on the teach dollar. you came here on the teach dollar, correct? >> -- teach dollar. >> >> one question he did not put in his opening comment was why? we have dodged and weaved this whole time for the entire hearing as to why this happened? i don't think we're going to get an answer today. but, mr. george, i want to get to the bottom of your report. you reference there is gross mismanagement to regard with this situation. i want to know who you identified who had the responsibility to mansion this situation. i want names, i want to know where they work, when they work, and what they did? right now. >> learner is located in washington. joseph grant was her supervisor. he too isn washington.

located in cincinnati, there were a number of people a director paz, she was the acting director for a significant period of time this was occurring. there were various management technical units in the like. namessupply aing of those at your request. >> that is my request. >> i want to make something clear to response to ms. black. when i had my discussions with the commissioner and the secretary and the general council it was not to inform them of the results of the audit, it was to inform them that we were conducting the audit. >> when you had the conversation with the secretary, when did that occur? >> that happens shortly after he took office. it was after the policy had been stopped and the issues, we hope

resolved. --as a country law you mared lawyer, you referenced something i've seen many times, at this time. that implies to me, there's addition allegations coming down the pipeline that could uncover information. is that correct? >> that is an accurate statement, sir. >> i will be eagerly awaiting those future investigation. i applaud your work and i ask you to continue to do that work. mr. miller, i want to understand exactly. we identified numerous people in your organization that you hat ultimate oversight for, his ability to identify those individuals. you didn't identify those individuals in type of management oversight when you were appear of this situation? >> i was aware of my own management chain, yes sir. >> ok, who in your management

chain did you talk about this situation? >> after naming -- >> you said you talked to people in your chain. >> i talked to loist and joseph. >> just those two? >> i talked to folks who went out and worked on the case, nancy marks. >> who was in cincinnati who you orally disciplined? >> no, she is a senior technical advisor. >> who was the employee that you orally disciplined? >> i apologize i don't remember the name. >> then you said that person who was disciplined u.s. probably wasn't involved but there was another employee. who was that employee? >> let me go back. there were two employees, one of whom were reassigned, one of

them i asked to be orally counseled. the one that was to be orally counseled informed me that may not be the right person. they pulled in all the managers to talk to them. >> do you have those names? >> i have to send them to you. >> i request for the record those names. >> mr. young is recognized. >> i want to know why this happened. you have said over the past week that the i.r.s. officials started targeting american for their political beliefs in march of 2010. that was after observing a surge in applications for stay cuts 501 c-4. you both cited an increase of 1,500 applications in 2010 to nearly 3,500 in 2012. the data in the audit says the targeting began in march 2010 before the uptick.

the audit also says on page c-4e that the number of 501 applications was less than 2009. mr. miller, you said here today that you accept the i.g. report's finding of facts. how do you reconcile the facts that i just laid out showing no upticks for your motivation for targeting conservative groups? >> i think there was an uptick. >> you have indicated that you agree with the findings in the report. it says there were no uptick. how do you reconcile it? >> i can't speak to that. >> >> so you don't agree request the resnort >> i have to look at the i.g. report. >> in june of 2011 ms. learner learned about the practice of targeting conservative groups for donor lists and other information. she learned that was going on

more over a year. she claimed she try to put a stop tot. i have letter here with her name. t is dated march 16, 2012. she directs a conservative indiana group to comply with an inappropriate letter question under penalty of perjury, i have that request here. one year after she said she stopped the practice she sent the organization a letter demanding a request that she already said was inappropriate. this strikes me as peculiar to say the least. further, this indiana group had their status denied on february 18, 2013. four days later, on february 22,

2013, their request was granted. even though they never provided the required information. o after seeing these actions and an approval of an application that looks like to me that someone was covering their taxes are over four-day period. how can assurey nstituents that the employees of the i.r.s. are not targeting groups they disagree with? >> let me put this in sort of time order. i think, again, there's some fundamental mashing of issues. there is two issues. one is the list issue which began about the time you said, i believe. one is how we processed the cases. the donor list letter, i'm not speaking to that case because i don't know. but that issue occurred much later in time. i to have of go back and check but i believe it occurred after

lois stepped in and stopped the listing of the first issue. the development of those cases were still problematic. we had not got on the bottom of that and thas that was the case. i don't have an answer for you on the last piece of that. >> wait a second. she said she row solved the situation. she said -- resolved the situation. a year later she demands a group fulfill a request for the inappropriate information. i don't believe you have addressed that issue. >> first, you show nowled her signature is on there. her signature is on 70,000 applications let's not personalize this to her. secondly, probably more importantly, i think, again, my understanding of what i think mr. george has said is that in

211 in june or july, she handled and fixed the list issue. the cases were still in development. the cases needed to be in development. they were issues we just did a remarkable bad timeline. >> all right, sir. it is curious, a denial on february 18, 2013 then a granting four days later. it does look a bit fishy there. >> time has expired. you will have to respond in writing. >> mr. george, you've been on the job since november 2004, is that correct? >> yes. >> anything rise to this level before? >> no. >> why did it take so long from the first time we knew it was happening to get this done? the prosecutor said the other day he just got a look at the report and that was the first time he knew anything about it, other than reading it in the papers, i guess.

have you seen it that magnitude this before? >> no. >> it has never come up before? >> no, it has not. >> all right. mr. miller, you've been on the job for quite some years but the current job is from november 9, 2012. is that riket? .> you just took over >> yes. >> before that, you were the commissioner of tax commissioner of government entities division. you were in the job that we're questioning now that group of what was happening there? so would you have been in cincinnati? >> no. >> you were never in cincinnati? >> no. >> so it is some outpost? >> i.r.s. is a nationwide organization. >> i understand that. if you believe it is uncomfortable sitting over there you waut to be a private individual when the i.r.s. is asking you questions.

my question more specifically, how did cincinnati get to where they are? how did they develop that strategyry? how do they target your folks? just a couple of rookies show up, didn't know what they were doing? >> i would point to the repower on what happened. >> i understand that. these are low level people that pushed the wrong button. now, when cincinnati can't figure out, who do they confer with? back here to d.c.? >> there's two -- >> yes or no, does it come back to d.c.? >> yeah. >> ok, so d.c. and cincinnati should be pretty well connected so this does not come as a great shock to anybody. it establishes what the american people fear. i have a grandson who is afraid to get oust bed at night because

he thinks someone is going to grab him and that is what american people think about the i.r.s. now this reconfirms that, you know what they can do anything they want to anybody they want any time they want. this is very chilling for the american people. i know that -- you're resigning, u're walkingway from it. but this is not going to go away. this is a pandora's box that has been open. i don't believe that the white house just found out about in the news report and happened to grab a tv shot or just read mr. george's report. anybody heard about this before? i'm just getting the first look of this, i think maybe the executive office -- maybe treasure falls in that. i'm not sure how it works. i'm really concerned. i have to tell you, where you're

sitting you should be outraged but you're not. the american people should be outraged and they are. this committee, this has nothing to do with political parties. this has to do with highly targeteds. this reconfirms everything that the american public believes. this is a huge blow to the faith and trust that the american people have in their government. is there any limit to the scope of where you folks can go? is there i anything at all? is there anything we can ask you is there any question that you shouldn't ask? how much money do you have in wallet? what sign do you put in your yard? this is a tax question? it is intimidating. i don't know if i got any answers from you today. there's more that has to come out in this. for anybody to sit here today and listen to what you have to say i'm more concerned today than i was before and the fact

that you all can do just about anything you want to anybody. you can put anybody out of business that you want any time you want. i got to tell you talked about your horribly run organization. if you're on the other side of the fence you're not given that excuse. when the i.r.s. you're not allowed to be run horribly, you're not aallowed to do one damn thing that is not in compliance because you're held responsible right then. this is an overreach and this is an outrage for all american. [applause] >> the meeting will come to order. order in the committee. >> thank you, mr. chairman.

i want to make a couple of comments first. the surge in these groups that are the subject of this hearing is not related to a supreme court case. if there was a surge at all. it is related to the nonsense in washington. that's why people were getting engaged. the supreme court has no bearing on these groups, ultimately. that's ridiculous. what this hearing has demonstrated for me is our most expansive federal powers are given to the most intrusive agency. then you add on top of that inexens and whatever else we and whateverpetent we have. i have a constituent in little rock is being audited. he was outraged.

he asked me how much cash do you carry in your wallet? how much cash does your wife carry in her wallet? do you use the internet? i don't care what rules are written down or not written down. these people ought to have enough common sense this is stupid to ask this kind of stuff. if they don't know that on their own they ought to quit or be fired. it is craziness. now, i've known you for a long time. general, i've looked at your investigation. i appreciate the work you've done. not an an audyit this is investigation. you did not request e-mails. you did not do what you would do in an investigation. there's a reason that you don't know who came up with this

because you did not investigate this. you might be now, are you? >> i'm not in the position. >> so that means you are. the bottom line is for those looking this is an audit and it is helpful but it is the tip of the ice berg. it is the tip of the iceberg. it is willinging at metrics and interviewing folks. we worked years ago. we know how important e-mails are. i trust that you're going to get to the bottom of the e-mails. let me just mention quickly, if you want to know a we're a lot of this comes from look at senator levin's letter. he specifically mentioned a bunch of the groups that you targeted. the other senators made the point but they did not mention groups. it was senator levin's letter to some extenlted. you were doing what democrat

senators were asking. the press ought to go here to the senate when you're done and ask them questions. you may have been confused when she worked there but she was there from 2009-2012. you said you had horrendous customer service but she got promoted and $100,000 in bonuss. wow. incredible. you said the buck stops with you. it stopped with her before that. she was directly in charge of these rules, of this targeting. what did she get? bonuses and moved to a job. do you know what her job is now, she's coordinating section 1414 of obamacare. that is the provision that says there's an exemption to disclosure of tax information. what is that?

that means the treasury can share your tax information with h.h.s. for the purpose of implementing obamacare to see if you have a really expensive health care plan or whatever have you. it is right there in section 1414. she provided horrendous customer service under her watch and now she's going do the same implementing obamacare. swell. this is the perfect example of why we need tax reform. if you want to distinguish and limit the power of the i.r.s. you have to reduce the complexity of the tax code and take them out of it. thank you, mr. chairman. >> thank you. >> thank you, mr. chairman. as a c.p.a. who as represented many taxpayers in the last three decades i'm appalled. i'm appalled that the

you said these actions even though they were contraire to the policies at the i.r.s. it was not illegal but inappropriate. mr. miller, if a taxpayer was in front of your agency and they did something that was contrary to treasury policy. would that be illegal or inappropriate? >> if they did something contrary -- >> on their tax return. >> no, we would be auditing them. >> i know you would audit them. i've seen your agency bring people to tears. it is amazing how you're answering some of these questions. you said i don't know. if american taxpayer said to you i don't know the answer what would your agency do that to that person? >> we would work with them. >> i've seen what you do to them when they say i don't know. that is what the problem is.

you talked about at some point in time you said these were serious infractions, you said these were outraged. when were you outraged and when did you first learn of this? >> may 3, 2012. >> so may 3, 2012 you were outraged. you testified in front of this committee on july of 2012, why were you not outraged then? >> i was answering the questions that i was asked, sir. i knew that this was being viewed and this was going to come out. >> but you were outraged a couple of months before and you did not let congress know at this point in time. >> i fixed the problem. >> i want to offer in the record a statement from my constituents the ohio christian appliance.

>> without objection. >> they were applying for an educational trust. they are advocating life, faith, and freedom. what was the i.r.s. concerned about? what were they scared about when it comes to life, faith, and freedomle? i can't speak to an individual case. i have no knowledge. >> life, faith, and freedom. that is something an i.r.s. pull would pull an application for. the timeline on this february -- they filed in february of 2011 rein march they were told they would have anens and in december they got a letter saying they had two weeks to respond their application would be denied. then they responded. by the way, some of the questions, you talk about what are some of the questions. they list here is your organization -- is your action organization against

anti-christian bigotry is it educational in nature? is your organization engaged in such activity? are some of those appropriate? >> don't know because it is a specific case. one of our difficult areas is determining what politics and what is education. it is a difficult line. >> i don't think anything in this application leans towards politics. it leans towards, as i said, life, faith, and freedom. mr. miller, i understand after the presidential election the i.r.s. approved dozens of application from scombert groups. why was there such a large approval after the election? >> i don't have that information. my information is in may we ask that the cases be grouped in a fashion that we move them quickly and try to fix the process problems we had. there was a number of applications from tea parties and others that were approved at

that time and we pushed hard. >> has that process changed post election? >> no, not that i'm aware of. >> i yield back. >> thank you. that brings this hearing to an end but i promise the american people this investigation has just begun. hearing adjourned. [captioning performed by the national captioning institute] [captions copyright national able satellite corp. 2013] >> next defense secretary chuck hagel and joint cheefs of staff martin dempsey discuss actions to stop sexual assaults in the military. then another chance to see the house ways and means how the i.r.s. handled tax exemptions for conservative groups.

>> on the next "washington journal." michael beckel looks at the i.r.s. and the revelations that the agency targeted conservative groups. "u.s.a. today" reporter exams the relationships that the presidents have had with the i.r.s. "washington journal" live at 7:00 a.m. eastern on c-span. >> how do you feel about describing your science in 30 seconds? attempt. ng make an take that remaining thing and throw it away.

you go from a yardstick to the size of my fingernail. if you do it 10 times you get the size of the atom. we have no instruments to measure that. so people like me have been working on a piece of mathematics called string theory to answer that question. i tried. my wife is asked by people what does your husband do? her answer is he makes up stuff for a living. that is kind of right but i tell my story as the following. most people know what a novelist do. they take words and sentences and makes stories. that's what we do except we use mathematics to make up our characters and tell our stories. if we're good, our story corresponds to something that happens in nature. that clip you saw, was my

attempt to boil down a 30-second sound byte mode describing what it is that i and people in my community do to understand the world. >> more with the national science recipient sunday at 8:00 "q&a."an's >> defense secretary chuck hagel and general martin dempsey hold a press conference at the pentagon. yesterday, they met with president obama and other military leaders to discuss efforts to stop sexual assaults in the armed forces. the meeting came after reports this week of sexual abuse allegations against two military officers who were assigned to prevent such crimes. earlier this month, the pentagon released its annual report on sexual assaults in the military which showed a 37% increase in estimated sex crimes. his is about 40 minutes.

>> good afternoon. thank you for coming. i'm sorry we had to move this one day, but nonetheless, it's been a slow news week for you. i know you've been looking for something to do and to report on. let me begin by making an announcement regarding a nomination that the president is going to make, and that is a change of command for our forces n korea. general curt scaparrotti is going to be nominated by the president to replace general j.d. thurman in korea. and we're very proud of that announcement; i know the resident is.

and general dempsey may want to address that in a little more detail, since he's worked very closely with general scaparrotti. we'll have more to say about that announcement as we go on and as the president makes his formal nomination. but let me just note a couple of things about general j.d. thurman. he has done a tremendous job for our country, for our forces of that region. he has credibility. the confidence that people have in him everywhere is really pretty special. he's been there, as you all know, at a very uncertain time. and his steady, wise leadership has really counted, so i wanted to note that, and, as i said, we'll have more to say about both those -- those generals at he appropriate time.

yesterday, as you all know, i participated in a meeting with the prime minister of turkey, with the president, vice president, secretary kerry, and others. long meeting, very productive meeting, good meeting. if you want to talk about any of that, i'd be glad to respond to any of the questions you have. this morning, general dempsey and i hosted the turkish minister of defense and foreign minister for about an hour-and-a-half, and we talked about many -- certainly the regional issues and followed up on a number of points that were made in the meeting with the turkish prime minister and president obama yesterday and would be glad to respond to any f those questions. this afternoon, after this news conference, i -- i will host the french minister of defense.

and we will spend a considerable amount of time talking about different mutual interests in nato and certainly what we're doing together in a number of areas. and so if you want to pursue any of that, i'd be glad to respond. before i ask general dempsey for his comments and we take your uestions, just a couple of updates on the sexual assault issue. you all know that general dempsey and i met with the president, the vice president yesterday, as well as our senior enlisted and officer leadership in the u.s. military. i thought it was a very important, productive meeting. it was important because it gave the president an opportunity to sk questions directly, and get the sense of this huge problem,

serious problem in our military, ask questions of the military leadership. the military leaders in that room answered and responded and, at the president's invitation, gave i thought very honest evaluations of what they thought bout the issue and clearly articulated what we're all going to do, and are doing, to address t. it was also important for our leadership, our military leadership, to hear from the president on this. the president was very constructive. he was very clear. there wasn't anybody in that room who wasn't disappointed and embarrassed and didn't recognize

that we've in many ways failed. but we all have committed to turn this around, and we're going to fix the problem. as the president said in his comments after that meeting, there's no silver bullet. this is going to take all of us. the problem will be solved here, in this institution, and we will -- we will fix it and we will do everything we need to do to fix it. there's not a military leader who was in that room who's not completely committed to that. these are men who -- and women in our services who have devoted their lives to this institution and to the men and women who serve this country. so no one understands the depth of this more or more concerned or more committed to fix it than

-- than those people in that room with -- with the president. and i will be glad to respond to any particular questions on that. his morning, i had the first meeting with the congressionally mandated sexual review panel that was mandated in the fy 13 national defense authorization act, which i think you're generally familiar with. i noted a few days ago that i had selected the final five panelists. it's a nine-panel review board, four selected by the congress, five selected by me. we had about an hour-long telephonic meeting this morning to go over what the expectations were, what the president's expectations were, what -- what my expectations are, what the congress's expectations are. and i think we've -- you've all seen the membership, they're all highly respected, highly regarded, experienced men and

women who understand cultures, society, command, and i think it's an exceptionally well-balanced group of men and women who we look to, to help us. and they are charged with reviewing everything we're doing and then coming up with recommendations to the congress and to me and to our military leadership on what we need to do to fix it, how can we fix it. and they will have their first meeting physically impaneled -- most likely it'll be in this building -- next month. we're putting that together. so if you want to get into any of that here in a minute, i'll be glad to. also, i wanted to note that this afternoon, after the meeting with the french minister of defense, i will hold my first weekly review and progress meeting on the sexual assault directives that i started about a month-and-a-half ago.

it's not good enough to say we have a zero-tolerance policy. we do, but what's that mean? how does that translate into changing anything? and i want to know -- and i'll get weekly briefs. they will be on my schedule, in my office. i'll chair the meeting. what are we doing? what did we do? how do we continue to break through this? it's just not good enough for people to walk out of my office and say, "well, we're doing it." i want to know how it's being done, and i want to know everything about it. who's being held accountable? and i just signed off on a directive here today on another part of this, and that is the recertification and the review and the retraining of everyone associated with the united states military who has any responsibility for any sexual abuse offices, sexual protection

offices, in any way dealing with this program across the board. it will be standardized in all the services. and all our military recruiters, every military recruiter, regardless of the service, will undergo this. we've got timeframes on it. you will all be given, i think, copies of the directive here after the conference, so you'll see exactly what i said. but that was signed off on today. there will be more of these directives. there will be more action. you know a number of the things that i've done, we've done. and i might add, because i ask general dempsey for his comments, this wasn't done just independent of everybody else. i've spent a tremendous amount of time with the chiefs on this, the secretaries. chairman dempsey has led on this. this problem can't be fixed by the secretary of defense alone. i can direct it. i can hold people accountable. and i will.

the president's held me accountable for it. and there's not one of these people in leadership today that wants this to be their egacy. and so we will continue to work this, and we'll work it hard. it is as big a priority as i have, for obvious reasons. our force structure is the core of who we are. it's the fabric of our system. no matter how many new technologies we employ and how much the quality of our technology and our weaponry gives us an edge -- and it does -- no matter how much money we have, it won't work unless your people make it work. and so it has to be at the center of our focus of leadership and our priorities. so with that, let me ask general dempsey for his comments and then we'll open it up. >> thank you, mr. secretary. i can think of no finer officer

to be promoted to general and to take command of u.s. forces korea than mike scaparrotti. scap's an exceptionally competent leader with the moral character to match. like our current commander, general j.d. thurman, he's extraordinary well-suited to sustaining our strong alliance with the republic of korea. scap's quiet confidence has delivered success throughout his career, whether as deputy commander of u.s. forces in afghanistan or, most recently and currently, as the director of the joint staff. as my director, he has helped advance my priorities to include our urgent work to eliminate sexual harassment and sexual assault from our ranks. as i've said before, the risks inherent to military service must not include the risk of sexual assault. it betrays the trust on which our profession is founded. it's a crime that demands accountability and consequences. and as you know, the joint chiefs have spent the better part of the last year implementing a campaign focused on prevention, investigation,

accountability, advocacy and assessment. the additional actions recently directed by secretary hagel will strengthen those efforts. the emphasis on prevention is especially important. as the president made clear to us yesterday, we can and must do more to change a culture that has become too complacent. now's the time for us to recommit ourselves to our profession. now's the time for character to be valued as much, if not more than competence. now's the time for moral courage at every level. there can be no bystanders. i remember my early years in the army when racial issues and drug abuse tore at the fabric of our service. the army was broken. with moral leadership and a recommitment to professionalism, we changed that course, we restored trust in the ranks, and trust among -- between us and the american people. today the joint force is not broken. in fact, it's remarkably resilient, something i spoke to

last week when i was presenting the commencement address at arizona state university. but we have a serious problem that we must solve, aggressive sexual behavior that rips at the bond of trust that binds us together. we need -- actually, we must change course. every single member of the joint force in every unit at every level must be alert to the problem and be part of the solution. working together, we can and will restore faith in ourselves and the trust and faith of the american people. thank you. >> bob? >> mr. secretary, you mentioned that the president said yesterday after your meeting that there is no silver bullet to fixing this problem, but what is your best bullet? and also, do you think that -- is there any reason to believe that alcohol use and/or abuse is part of this equation and there needs to be more attention to that? and i've got a question, also, of the chairman. you were quoted the other day as saying that you see a connection between this problem and the effects of being at war for more

than a decade. i wonder if you can elaborate on that. and also, with the war winding down, does that suggest in any way that this problem would wind own with it? >> on your question regarding the use of alcohol, yes, alcohol does play a very big factor in sexual assault, not every case, but in many cases. and i don't have all of the demographics and all the metrics on this, but there's no question it does. that is a part of this, but -- and it can be used as an excuse, but it is -- it's part of the larger context of, why is this happening. o your bigger question, what are our best bullets, well, as the president said yesterday,

and i've said, and certainly our leadership, both at the enlisted and the office corps level, has said that this is -- and you've heard it -- this is cultural, this is an accountability issue. it's sometimes a structural issue. are we going far enough up and down the chain of command? there are so many dimensions to this that i don't think you can come at it in one simple way. you know, i -- i get a lot of advice on this, and i listen to everybody. well, why don't you just fire some people? well, yeah, we could do that. and, you know, who are you going to fire? now, the people who have been charged, they, as you all know, are moved out of their billets and the responsibility until they have due process. where we can find people who have actually perpetrated these crimes and we prosecute, and so

on, yes, we get rid of them. and -- but there's no simple way to come at this. and so, you've got to come at in -- i think from the entire framework of starting with, why is this happening? and try to understand that. and there are a lot of dimensions to that. and the chiefs got into that with the president yesterday. then you get into the reporting process. now, when you look at the -- those numbers that are essentially spiking, and i -- and i suspect they're going to continue to rise on the reporting, as vice president biden reminded us yesterday, there is a glimmer of hope in that. there's no good news in this, but there's a glimmer of hope, because in many cases -- and we're going back in and trying to understand this better and asking a lot of questions -- is at least there some new confidence being built out there and developed that, when people come forward and report something, that they have some assurance that

fairly and -- and that there will be something done about it. then -- then you have the victim's rights here. the protection of those victims, what does a victim think about and expect if they -- before they come forward? will they be treated fairly? that's part of it. then you -- then you've got to look at the prosecutorial side. then you look at the penalty side. you look at all those pieces, and you can't take just one or two or three of them and -- and fix just one or two. it's -- it's everything. that's why the panel, the outside independent review panel, is so important here, because as you all know, i think the last count i got this morning, there are 10 pieces of legislation in the house and the senate that change components of -- of all this reporting and the structure and who's accountable

and some of it -- even taking it out of the military command structure. and we're going to have to do something. we will do something. we're working with everybody. but whatever we do, we want to make sure it's right, because there are consequences to whatever we do. and that's why the panel is so important. it was congressionally mandated. and we need to see what they come up with, and we're listening to everybody. we're talking to everybody. we're talking to other militaries, by the way, from around the world and -- and see what they think. the president noted that yesterday, and i told him that we were talking to different militaries around the world. how are they dealing with this? and what kind of command structure have they changed and what works? so i think it's all of those things, bob. it isn't just one or two things. general? >> bob, at some level, this is actually a continuum of -- of a challenge we've had. you know, you were around in the mid-'90s when we had -- within a space of about 18 months in the mid-'90s we had tailhook, aberdeen, and a military academy

scandal. and then i think, you know, we went to war and maybe some of that was masked. and you asked, do i think that there's an effect of 10 years of war? yeah, instinctively, i do. and we've been looking at what that might be. and, you know, you might -- you might argue that we've become a little too forgiving because, you know, if a perpetrator shows up at a court martial with a rack of ribbons and has four deployments and a purple heart, you know, there is certainly the risk that we might -- we might be a little too forgiving of that particular crime. so we're looking for game-changers, really. and some of these congressional proposals could be game-changers. and so we want to make sure, as the secretary said, that as we take a look at the -- the proposals, that we understand how they fit together and, more importantly, how -- what are the second- and third-order effects? because, look, in our system, we give a commander life-and-death

decision-making authority. i can't imagine going forward to solve this issue without commanders involved. >> well, can i follow on that? because if you listen to the women in the military who are sexually assaulted, they say the best thing that you can do to change this is to take this out of the commanders' hands, put this in civilian courts. they are afraid to talk to their commanders, because they know the men who are assaulting them. are you considering at all changing that? and where do you all stand on that move? and then i do have another question on syria. we -- we've learned that assad is being provided with anti-ship cruise missiles and that the russians are putting a dozen or so extra ships in the med off tartus. do you consider this a provocative act designed to sort of push the u.s. out of involvement in syria? >> well, i'll start on your first question. we're looking at everything. and we are listening to victims

carefully, closely. and i addressed this in my -- in my first answer to -- to bob's question about the rights of victims and what goes through their minds before they come forward. and are they afraid? are they intimidated? obviously, yes, yes, yes, on all those questions. so we're looking at everything. we're not taking anything off the table. and we want to understand all that's best. so that -- that's what i've said, that's where i come down. as to your syrian questions, just a couple of general responses. one of the reasons -- one of the primary reasons that secretary kerry went to moscow to meet with president putin and foreign minister lavrov was to talk about all of these issues and try to find some common ground that the russians and the u.s.

can come to, some intersection of interests, because we all have interest in the middle east. what's happening there, everybody knows, is very, very dangerous. and what we don't want to see happen, the russians don't want to see happen, is for syria to erupt to the point where we -- we may well find a regional war n the middle east. so we continue to work with the russians on their interests and everything we can do to convince the powers that are involved in the region to be careful with escalation of military options and -- and equipment. we'll continue to work through that.

so this is complicated, and i think i would leave my answer that way. and if general dempsey wants to add anything... >> well, just on syria, i mean, you know, it's at the very least an unfortunate decision that will embolden the regime and prolong the suffering. so as -- it's ill-timed and very unfortunate. >> mr.secretary... (crosstalk) >> you're talking about which -- which missiles, the anti-ship... >> the ship -- the ship missiles. >> so they have made clear, the russians, that they're going to keep delivering missiles in accordance with arms sales they made years ago. how does that change -- and particularly i'm thinking about the s-300 air defense system -- how does that change your thinking about arming the ebels? and how does that complicate your planning for all of the military contingencies that you're planning for? >> well, we plan for every military contingency, as you

know, and every option. as general dempsey said, the escalation of weaponry in the middle east is dangerous, and we are working with our partners in that area, as well as other countries, to make sure that whatever influence we have, that that doesn't continue. general dempsey made it very clear that, on the specific areas of the missiles, whatever else is involved with the russians, does not help. it makes it more dangerous. and i think, to summarize my thoughts on this, is that we continue to keep every option open, as the president has said. we are already doing a lot in

syria on the humanitarian side, on the non-lethal side. we are continuing to try to bring some consensus with all the different countries involved, the gcc [gulf cooperation council] countries, others. a lot of the conversation with prime minister erdogan yesterday and this morning and their entire delegation was about this issue. and certainly my opinion that to to de-escalate, to find some common ground to assure that syria doesn't disintegrate and the middle east erupt into a regional war, we continue to obviously keep every option open and what further action we may take, but also working with the other players here. >> just on the -- on the shore- to-ship missile capability and

the -- and the sa-300 system, there are more capable systems. the sa-300, for example, higher altitude, longer range, multiple tracking capability. it pushes the standoff distance a little more, increases risk, but not impossible to overcome. what i'm really worried about is that assad will decide that, since he's got these systems, he's somehow safer and/or more prone to a miscalculation. so, you know, again, an unfortunate decision. >> yes. >> yeah (inaudible) from al jazeera english television. one hundred days since the hunger strike began in guantanamo, 102 detainees currently on -- making this protest. and i wondered, can you fill us in on what the department has done, what the overall military has done to try to address some of their concerns, to try --

what -- what is being done to try to end this hunger strike? >> well, first, we have a responsibility, an ethical responsibility, to assure the health and well-being of every detainee. and certainly, we're doing everything we can to do that. as you know, president obama noted a couple weeks ago that he is going to come back -- and he's in the process of that now to find some resolution to guantanamo. and i think our role, the military's role there, is being handled with -- with as much responsibility as we should and need to with our detainees. and so i think -- i'll ask general dempsey if he's got any other thoughts, but we're doing everything we can to protect those detainees.

and we do need a resolution to this. the president has said that, and he's working toward it. >> the only thing i'd add is that, you know, the united states military guards guantanamo, and our responsibility is clear. that is the -- the safe -- the well-being of the prisoners, the safety of both them and the guards, and that's our job. that's what we're doing. the rest of this is really policy decisions. >> okay. >> you talked a little bit earlier about looking at the various congressional proposals on sexual assault. just to -- to follow up on justin's, do you at this point support senator gillibrand's legislation to take sexual assault and battery cases out and put them in the hands of a prosecutor, as opposed to the chain of command? and what do you think about some of the new proposals by senator

blumenthal about creating a victims compensation fund? could that encourage people to come forward? >> well, i've spoken to all of those senators a number of times, as many of our leaders have, on their proposals. we're working with their staffs on all their proposals. we're talking to all the members of congress, both in the house and the senate. and i've got two more conversations this afternoon on their proposals. we are -- and i appreciate this we all do -- accommodating house and senate members and working with them on what we think is workable, giving them our best assessment. they are listening, and they are giving us that opportunity. we are not taking any position on any bill, that this is our favorite bill or this is not our favorite bill. we're looking for components of all the legislation that we think make sense. but i also would say that -- going back to what i noted

earlier about the congressionally mandated panel, i would hope that we -- we would have some time here, everyone would have some time, to listen to what the panel comes back with. this was a congressionally mandated panel and give them some time here to go in and really assess the problem. why do we have the problem? how can we prevent the problem? what should we be doing better? it may well end up those recommendations are exactly what one or two are the same way that congress have been -- have proposed in their bill. so we'ookire lal all of them.

>> yeah, i'm actually in receipt of a letter from senator levin and senator inhofe, senate armed services committee, asking me to provide my military advice on the specifics of those bills. and i'll -- i will communicate with them before i communicate with you. >> barbara? >> mr. secretary, you've talked a lot about the concept of accountability, but this isn't a new problem in the military. this has been going on for military women for some time. so what -- what's your philosophy, your decision-making about accountability? when do you hold someone accountable? and with respect to both of you, the joint chiefs, as an organization, they -- they're in charge of training, and they know this problem's been going on for many years now. when do you hold somebody accountable on the senior level for -- i'll be very quick -- not getting the job done as you would if there was a major accident and lives were lost, if it was drugs, racism, attacks against gays in the military? very quick follow-up for general dempsey on syria. should this -- given what you've

said about your fear of a wider war, do -- do you recommend the syrians be stopped militarily, if they have to be, from getting the s-300? >> i think, when you come at this, as you noted, specifically focus on accountability. and i have. you're exactly right. i have felt -- by the way, it isn't just applicable to this issue. it's everything in life. if you don't have accountability, you don't have much. in fact, our constitution, our country, our government was founded on accountability. it's why we have three coequal branches of government. and what we're looking at in every way, many of the directives that i've given this week, two weeks ago, back a month-and-a-half ago, were focused -- if not every one of them -- on some element of accountability of every chain of command. the division commander is in

charge of that command. regardless if there's a brigade commander, battalion commander, company commander, that connection has to work all the way up and down the line. we are looking at how we can do that better. we are -- one of the reasons we're going back and we're re- certifying everybody that i talked about earlier, the directive i gave -- formally gave today, announced a couple of days ago, is -- is to go back into that chain of command, go back into that accountability. the president talked about it. it is an essential component that somehow has been lacking or broken down. i don't know. but it is -- is a central part of how we fix the problem.

there are other pieces, too. >> but the accountability (off- mic) united states military on the issue of sexual assaults against military women and men, seems to me that is more than just -- i mean, that's an extraordinary thing for a secretary of defense to acknowledge. if accountability is lacking, what do you do about it? >> well, i responded in the -- in the general sense of your question of accountability. the accountability of any institution, especially the discipline of the military -- and i'll let general dempsey, who's devoted 39 years of his life to this, understands it far better than i do -- if any component of that breaks down, if it's lacking anywhere, there's going to be a problem. of course there's accountability in the military, or we wouldn't have a military. the chairman couldn't make decisions and the combatant commanders couldn't give orders. and if there wasn't accountability in the chain of command, things wouldn't happen. of course there's accountability. i was referring to the specific area of what's broken down in sexual assault, starting with

reporting, starting with reporting, and the follow- through of that. and of course, we -- that -- that's a key part of anything to get to a resolution, how do you fix it? starting with some of the questions about victims saying and rightfully so -- that they didn't feel their commanders were accountable enough to be able to come forward and -- and register a complaint, file a complaint, because they thought they would be subject to many things, which is true, which has happened, and then also having no confidence that anything would be done about their complaint. so that's what i was referring to. and that needs to be addressed, as well as all the components of this. >> you want the syrian question? >> yeah. well, first of all, they don't have these weapons systems. syria doesn't have control of them. >> right.

right. if they have control of them, there -- there are several -- there are several capabilities that syria has not used or potentially has not used responsibly, chemicals, long- range rockets, and missiles, and high-end air defense. and so the things that are in their control, we have options to deal with that. we -- we do not have options in any way to prevent the delivery of them. delivery to syria militarily? >> i -- i didn't say that. i didn't say we couldn't. i said we do not have options to prevent the delivery of any military sales to the syrians. george little: last question. >> yes? >> actually, on -- on syria, can you just both update us on -- you mentioned the humanitarian aid the u.s. has provided -- has there been any change in thinking on providing any lethal weapons to the -- the rebels since the last time we asked you? and then also, general dempsey, could you just clarify, earlier you were talking about -- to bob's question about the war and

any -- any impact that may have on sexual assaults. and you said that the military may have become a little bit too forgiving when they see someone walking in with all these awards and whatnot. have you -- have you seen specific instances of that happening? i mean, presumably you have a lot more clarity on individual cases than we do. are we seeing that as a problem? >> you want me to go first? >> yeah. >> you know, you never -- you -- you don't know what a panel -- what turns a panel as it deliberates. i mean, that's -- you know, you're not afforded the opportunity to go back and scrutinize it. but what i am suggesting is that, after 10 years of war, there is the potential that we should examine whether -- whether we've become a little bit too forgiving, not just of of -- of sexual harassment, sexual assault, but of other

forms of misconduct, as well. so if you're -- what you're hearing me expressing is that -- is the commitment to try to gain a deeper understanding of what we're dealing with and -- and an instinct that suggests that 10 years of war might be a factor. >> on your question, the answer is we -- we continue to look at every option, and we will. we have to. every option is on the table. >> next, you, everyone. to date house ways and means committee health hearing on the irs handling of tax exempt investigations for some conservative groups. after that, michele bachmann and senate minority leader mitch mcconnell joined to party leaders to discuss their treatment by the irs. then a chance to see defense secretary chuck hagel and joint chiefs of staff chairman general martin dempsey discuss efforts to stop sexual assault in the military.

>> the question is, why do we do it? why take the risks? ?s it for fun, adventure no. for the money? there are certainly easier ways ofing a living been doing this. we do it to understand the world. and how it changes. the world tends to move like the earth's legs. tensions build then suddenly they snap with violence little changed. we go to where the cracks are to see how the plates are fitting together. so the innocent have a voice. jockeys thato they are usually wrong. we do it because this is what we want to do with our slice of time. >> this weekend, nbc news chief foreign correspondent richard engel on the news em -- from the newseum dedication memorial ceremony. also this weekend on c-span two

davis onv, lanny handling scandals. saturday at 7:00 public by crisis tales book party. on c-span3's american history tv, former president gerald ford and members dwight eisenhower from his perspective. sunday at 3:00. >> outgoing irs commissioner steve miller told congress that foolish mistakes were made by the tax agencies but they were not motivated by partisanship. he is referring to revelations that some conservative groups were targeted in filing for nonprofit status. a treasury department regulator testifying at the same hearing said he did not find evidence that irs decisions were motivated by politics. this is three-and-a-half hours.

>> the meeting will come to order. on may 10 the director of internal revenue service division that oversees tax exempt group acknowledged that the agency was targeting political leaning organizations. four days later they confirmed that "the i.r.s. used inappropriate crier the to identify political organizations applying for status.? this began as far back as 2010. this goes against the principles of free speech and liberty upon in which this country was founded.

the disregard that the agency has treated congress and the american taxpayer raises serious concerns about the leadership at the i.r.s. let's establish what we know. based on the report, we know for an 18-month period i.r.s. employees employed key words to target applications for tax exempt status. these groups were subjected to further investigations. i.r.s. employees expanded their search to include groups about government spending, debt, taxes, the constitution, the bill of rights, or trying to "make america a better place to live." let me repeat that. people were targeted for making

america a better place to live. these americans had their applications delayed for nearly three years. 98 applicants were asked for improper information such as donor list and if family members were planning to run for political office. during that delay, other applications with names like progress and progressive were approved in a matter of months. the headline in "u.s.a. today." says it all. i.r.s. gave liberals a pass, tea party groups put on hold. some those cases should have been set aside due to concerns of their related political activity but no such review was done. i enter the "u.s.a. news today" report into the record. the i.r.s. officials knew about this since 2011.

despite a two-year long investigation by this committee, the i.r.s. never told the american people or their representatives about this simple truth. we were told no such targeting was happening, that is not just being misled, that is lying. we know the truth, at least some of it. we know these revelations are just a tip of the iceberg. it would be a mistake to treat this as one scandal. this maybe the one generating headlines but i count five violations of taxpayer right, the right to be treated fairly, impartially by their government. a white house official discussed the status of a private company, the tax status of a private company. second, in june of 2010 the targeting began. the i.r.s. started to threaten donors that

they were liable for certain taxes. in march of 2012 the huffington post published the donor list for organization of marriage. unlikely the final transition it was announced that i.r.s. leaked confidential applications from conservative groups. mr. miller, with all due respect this abuse cannot be fixed with one or two resignations. the reality is this is not a personnel problem. this is a problem of the i.r.s. being too large, too powerful, too intrusive, and too abusive of honest, hard working taxpayers. there isn't a person that i come into contact at home or anyone in this country that does not

fear the i.r.s. they fear getting something wrong on their tax filing. they fear the i.r.s.'s ability to audit them and wreak havoc in their lives. they are all -- only trying to make their lives better and make america better. every group in america is at risk. i'm sure your aware of the saying the power to tax is the power to destroy. under this administration, the i.r.s. has abused its power to tax and has destroyed what little faith the american people had in getting a fair shake in washington. this will not stand. trimming benches will not save the tree when the roots are rotten. only then will the american people get a tax system that

treats them fairly and honestly as they deserve. that is larger discussion it is tied to the issue before us today. how and why our tax system has gone so far off track. who started the targeting? who knew? when did they know? how high did it go? who leaked the private taxpayer information? why were the names of donors asked for and what was done with the lists before they were supposedly discarded? when did the administration know about each of these and what was the reaction? listening to the news this appears to be the latest example of cover-ups in this

administration. it seems like the truth is hidden from the american people long enough to make it through an election. the american people have a right to the truth, a government that delivers the facts good or bad. president obama promised to be different and deliver a better government, the most transparent in history. he was right. america deserves better. it is time to end the corruption at the i.r.s. and fix tax code that allows washington and the i.r.s. to pick who wins and who loses in america. i expect nothing less than the cooperation from the i.r.s. i recognize ranking member levin for his opening statement and thank for his commit to pursue this issue. >> thank you, mr. chairman.

i'm going read my opening statement. i will expand on it a bit now that i heard the opening statement of the chairman. this committee on a bipartisan basis takes seriously its oversight role and we're fully committed to ensure an i.r.s. that serves the american people fairly and efficiently. what is now completely clear is that the management and oversight of the agencies tax applications have completely failed the american people. i emphasize that. as we know from the inspector general's audit, the agency used inappropriate criteria in its review of tax exemption applications. singling out organizations based on their names or political views rather than their actual activities.

these criteria changed four times over two years with little management review or oversight. applications for years, work stopped for 13 months while one department waited to hear back from another. questions were asked that were not necessary. again, no oversight, no accountability. all of us are angry at this on behalf of the nation. we are determined to get answers to our questions about how this happened to ensure that it does not happen again. finally, throughout this time, the i.r.s. leadership has demonstrated a disregard for the oversight role of the congress and this committee. former i.r.s. commissioner testified in front of us in march 2012 and said that "no targeting" was going on.

two months later he was briefed on the i.g.'s investigation and was fully informed that indeed singling out by name had occurred on his watch. he had an obligation to return to this committee and set the record straight so did mr. miller. neither fulfilled their obligations. a little more than a week ago, lois learner was in front of our committee. she has been directly involved in this matter. yes, she failed to disclose what she knew to this committee, choosing instead to do so at a conference two days later. this is wholly unacceptable. one of the reasons that we believe, as i stated several days ago, she should be relieved of her duties.

chairman camp and i put together this hearing on a bipartisan basis to get the facts. we must seek the truth, not political gain. i just want to add in that the regard, mr. camp has said listening to the nightly news this appears to be the latest example of a culture of coverups and political intimidation in this administration. it seems like the truth is hidden from the american people just long enough to make it through an election. i totally, totally disagree. ths

essentially a bootstrap to continue the campaign of 2012 and to prepare for 2014, we will be making a very, very serious mistake and not meeting our obligation of trust to the american people. you're here today, mr. miller. you're here the inspector general to talk about what happened. how it happened, where it happened, who knew what, when. if instead, this hearing essentially becomes an effort to score political points it will be a disregard of the duties of this committee. i conclude with the sentence that we must seek the truth, not political gain. we look forward to full and

forthcoming answers to our questions today. >> before the witnesses are recognized, i will first swear them in. this is the prerogative of every committee chairman, it has not been the custom here at ways and means, but there for it is not customary to have been falsely led. there's the gravity proceeding in the need to tell the full and complete truth. please raise your right hand. do you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth, and nothing but the truth so help you god? let the record reflect the witness is answered in the affirmative. i would like to welcomej.-- welcome j. russell george. i think we'll wait for them to leave at this point. j.

russell george has been the general inspector for the tax administration from 2002 and the current acting commissioner for the irs, steven miller. you will each have five minutes to resent your testimony with-- to present your testimony with your full written testimony submitted for the record. mr. george, you're recognized for five minutes. >> chairman camp and levin. as you are aware, the organization i am a part of the, the inspector general, protects the integrity of the federal tax system. this was initiated based on concerns expressed by members of congress because of taxpayer

allegation that they were subject to unfair treatment by the irs. the report issued early this week issues 3 allegations. first, the irs targeted spas the ic targeted specifi groups applying for status. second, they delayed these groups applications, and third the irs request of the necessary and permission from groups they subjected to special scrutiny. all three allegations were substantiated. the irs used inappropriate criteria to target for review to party and other organizations based on their name and policy. this started in 2010 and continued to involved. the irs was following inappropriate criteria. let me read to you these criteria from a briefing held by the irs's exempt organizations

function. the criteria included the words "tea party, patriot, or 912 project.? another listing criteria was education of the public by advocacy or lobbying "make america a better place to live.? there were any statements in the case file criticizing how the country is being run. the reason for these criteria were inappropriate in that they did not focus on tax-exempt bonds and treasury regulations. 501c3 organizations may not engage in political and campaign organizations. 501c4 can but it may not be their primary activity. political campaign prevention, action taken on behalf of or against a particular candidate

running for office. although these criteria appeared in the irs documentation, they began selecting tea party and other organizations for review in early 2010. through may 2010 and may 2012, a team of specialists in cincinnati, ohio, the determinations' units selected cases for additional scrutiny. according to our findings, the first time executives from washington, d.c., became aware was june 2011 with some executives not becoming aware of the criteria until april or may of 2012. the irs's inappropriate criteria remain in effect for approximately 18 months. after learning of it, the director of exempt organizations changed the criteria in july 2011 to remove references to organization names and policy positions. however, they changed the

criteria back to target organizations with specific policy positions, but this time they did not include the tea party or other name organizations. in may 2012 dr. learning the criteria had again been changed, the exempt organizations director changed the criteria to be consistent with regulations. the organizations selected for review for political campaign intervention, 298 in all, experienced substantial delays in the processing of their applications. the organizations included tea party organizations, patriot organizations, 912 organizations, among others. as shown on the monitor, the status as of 2012 with the cases we revealed was 108 cases have been approved, 28 cases were

withdrawn and 160 cases were still open. zero cases had been denied. of the cases still open, some have been in progress for over three years and crossed two election cycles without resolution. of the 108 approved, 31 were t party, 912, or patriot organizations. the irs request the necessary and permission for many political groups. 98 of 178 cases that received follow-up requests for information had unnecessary questions. our evidence indicates that unitcincinti send these

letters out with little or no supervisory review. the irs later determined these questions work and needed but not until after media accounts and questions by members of congress in march 2012. this included the names of past and future donors, listings of all issues important to the organization, and what their positions were regarding such issues and whether officers or directors have run for public office or would be in the future. months after receiving these questions, 12 of the 98 organizations either received a letter or telephone call from the irs stay in the application was approved and they no longer needed to respond to the additional requests. the irs and form another 50 organizations as they did not need to respond to previous

requests for information and they were sent there revised request for information. regarding the donor and permission received, the irs informed us that they destroyed that intermission. in closing, our audit found clear evidence that each of these three allegations were correct. was the irs using inappropriate criteria in its review of organization the plan for tax- exempt status -- yes. was the irs delaying their applications -- yes. finally, did the irs asked inappropriate and unnecessary questions of applicants -- yes. these have raised troubling questions about whether the irs has the effect of management oversight and control at least in the exempt organizations function. so the nation can be persuaded that they are doing so fairly. thank you for the opportunity to present my views and i look forward to your questions. >> mr. miller, you are now recognized for five minutes. >> thanks for the opportunity to be here today.

given considerations, we have received the notice of hearing within the last two days and the irs was unable to prepare written testimony. i will have a very brief statement before it take questions. as acting commissioner, i want to apologize on behalf of the internal revenue service for the mistakes made and the poor service we provide it. affected organizations and the american public deserves better. partisanship or even the perception of has no place in the irs. it cannot even appear to be a consideration in determining the tax exemption of an organization. i do not believe that this motivate the people engaged in the practices described in the treasury inspector general's report. i have reviewed the report and i believe its conclusions are consistent with that. i think what happened here is foolish mistakes were made by people trying to be more efficient in the workload selection. the listing described in the report, while intolerable, was a mistake, and not an act of partisanship.

the agency is moving forward. it has learned its lesson. we have worked to correct issues in processing described in the report and give them the mets -- implemented changes to make sure this type of thing never happens again. management will take appropriate action with respect to those responsible. i would be happy to answer your questions. >> thank you, mr. miller. are you still acting director? >> i am. >> were you appointed by the president? >> no, sir. >> i was designated as acting in november of 2012. >> i'm not mistaken, you actually hold two titles. deputy commissioner for services and enforcement? in your role as deputy

commissioner, according to the irs web site, in that capacity you direct and oversee all major decisions with regards to tax- exempt and government entities division? >> that is a division that reports to the tax-exempt government entities office. >> of the website is accurate. you do your report to in that position? in both positions? >> in the deputy commissioner role, i report to the commissioner, if there was one. holding both hats, i report to the deputy secretary. >> of the treasury. -- of? >> the treasury. >> is not a violation to have all taxpayer information? >> un not sure what that means. -- i'm not quite sure what that

means. >> it is not just the return but any taxpayer information. >> 61 03 obligates us not to disclose taxpayer information. >> were you ever made aware that a white house official in a conference call disclose the confidential tax structure of a private company? >> i probably read it in the paper, sir. >> you were made aware through news reports? >> that was a long time ago. >> did you take any steps when you learned of it? >> i do not recall. i would have to go back and look. >> you did not inform the inspector general of that, or your superiors that he recollect? >> i'm not sure why would have to notify the superiors it was in the papers. i do not remember whether we made a referral or i made a referral at that time. >> according to the inspector general's audit, the targeting of conservative groups began in march 2010.

when we made aware?-- when were you made aware? >> i was aware of that on may 2012. >> how were you made aware? >> i was made aware not of the targeting of the process that was described in the report. and when i asked our people to go look at the cases subsequent to the public discussion of the letters coming out. >> that would have been in your role as acting director as well as the deputy commissioner for services? >> i was deputy at that time. >> when you say you had "some of your people, close "to would of youre been?-- some people, who would that have been? >> the senior technical adviser for tax exempt and government entities to lead a team to see what was going on in terms of

who had gotten those letters. >> did you inform anyone of that action you took? >> i asked the senior technical advisor to do that on march 23rd or 26, something like that. they came back to talk to me in may. subsequent to that, i'm sure ryan for the commissioner. he was aware of the letters as well. >> did you inform anyone other than the commissioner? >> up the chain at? >> i do not believe so. the inspector general had made it clear to us that they were whereupon at the time. -- they were aware of it it. >> was there a time when you becathe irs

launching audits against conservative donors? that would have been in about may 2010. >> i do not recall the date, sir, but in that timeframe there were press accounts and individuals' coming in to talk about it. >> did you learn from the press or inquiries from congress? >> it could have been either. it came up in a meeting and then it hit the press. >> in any event, after learning of that information, what steps did you take? >> we investigated what happened. we took a look. ultimately, we issued a directive that said the walk in the area -- the law was not that clear and we had not been in force in that area substantially since i believe 1982 or something like that that talked about gift taxes and c4 organizations.

i said let's not enforce right now. let's talk about it and we will put out guidance and it will be pushed back. i thought that was the fair thing to do. >> when you say you investigated, who would that have been? >> i don't remember, but we took a look at the issue and how it happened. you're looking at it as well, your committee. >> when you say "week," to do "we,"an?-- when you say what does that mean? >> the irs. >> what department? >> i do not know if it was an exempt organization. on not going to be able to answer with particularities. >> were you ever made aware of the confidential 2008 donor list for the conservative tax-exempt organization? >> i was. >> when was that? >> i would have to get back to you on that. >> how did you find out? >> i don't remember. it might have been the press or

someone coming to us with a congressional complaint. >> when you learned of that, did you take any steps? >> i believe we made a referral. >> you are not sure when the referral was made? >> would have been in the same timeframe. >> shortly after you became aware of it? >> it would have been. >> were you ever made aware of the leak of confidential applications for the tax-exempt status of conservative groups pro public cut? again, i cannot give you a perfect time line. the approximate time it became public is when i was aware. you would know about from the timeline. >> did you inform anyone else of that? >> i believe in the service informed me at the time, yes.

>> in each of these incidents, did you ever come forward to inform the congress? >> i do not believe so unless it came up in conversation or testimony. can i suggest something? on those two just to let you know, this to be the national organization -- those two situations, we went and, i think, they can speak to what they had found, but we made the referrals and, i believe, what they found was that those disclosures were inadvertent and that there had been disciplined in one of those cases, for someone not following procedures, but i will obviously let mr. george speak to that. >> you never informed the congress of any of these things that you are aware of? >> they were in the press, sir. >> all right. well, obviously, the irs mission statement says the role of the irs is to help american

taxpayers understand and meet their tax responsibilities and enforce the law with integrity and fairness to all. clearly, your mission is not being met. mr. george, i guess i would just have one last question for mr. miller. when asked the truth, you know the truth and you have the legal responsibility to inform others of the truth, but you do not share it, what is that called? >> i always answer questions truthfully, mr. kemp. -- mr. camp. all right. mr. george, were you ever made aware of the alleged disclosure of the confidential tax structure of a private company? >> we have been alerted. >> you're personally made aware?

>> in specific or in general? >> you specifically. >> to a specific company or in general? >> there was a disclosure of taxpayer information. the confidential tax structure, any information, is considered confidential. it was particularly the tax structure of a private company. were you made aware of that disclosure? >> we are made aware of public disclosure that is protected by title 26, yes. >> are your the incident by referring to? >> i am aware of that, yes. >> when we made aware? >> i do not have the exact date, sir. >> how we made aware? >> i believe it cantor the office of investigations or it-- it came through my office of investigations or it could have been through a hotline. i'm not completely certain. >> you do not believe you learned of that from an irs employee?

>> i generally do not below the commissioner or deputy commissioner level interact with the others. >> that would include the commissioner. no other employees informed you of disinformation? >> it would have come from one of my principal deputies in may had received information from someone, not that the commissioner level, but maybe at the deputy level. >> you're not aware and you cannot tell us for sure? >> at this time, i cannot. >> we made aware of a confidential donor list of the national organization for marriage? >> i have read in the newspaper the allegations to that effect, but i have to make it clear, mr. chairman, that the internal revenue code has very strict rules as to the way that confidential tax parents' permission is revealed.-- tax

information is revealed. i have to be very careful as to how i respond and whether i can even acknowledge publicly some of these revelations you are inquiring about. >> did you respond to that information? >> a review has been taken. >> is it ongoing? >> i would have to confer with my colleagues if you give me a moment. >> is an ongoing? it is not. >> there are daily reports of irs misconduct and it's clear more work needs to be done. is your office continuing to investigate the allegations? >> yes, we are. >> mr. levin is recognized. >> thank you very much. i want to go on to other things.

the incident that mr. camp has been talking about, the disclosure, what years were those? mr. miller? >> i apologize for not having the date at hand, but it has been a couple of years now, i believe. >> the was the commissioner at that time?-- who was the commissioner at that time? >> i believe it was mr. schulman. >> who appointed him? >> mr. bush. >> ok, let me start with two key issues. there's no question about the inappropriate criteria. i wanted to focus on that. let me first ask the right up front, if i may, mr. russell, during the course of your audit, were you allowed access to anyone requested to interview? >> to my knowledge we were not denied access to anyone.

>> did you can interview employees in cincinnati and both d.c.? >> yes, we did. >> on page 7 of the ig report, it states they were not influenced by any individual organization outside the irs. is that correct? >> that the information we received. >> did you find any motivation and the tax-exempt notification? >> we did not. >> during your review of this matter coming you indicated when you had started, did you find any evidence of political motivation on the part of employees involved in processing the applications of this this year? >> we did not, sir. >> if we could put on the organizational chart, is that

possible? is someone going to do that? it is called high-level organizational report. mr. miller, the inappropriate criteria that singled out applications for tax exempt status was developed by what office? >> it would be developed by an office that is actually not on here but is under lois' lerner's jurisdiction. >> where are those employees located? >> for the most part, they are located in cincinnati. >> they found the director of exempt organizations on this

chart, which is not on the screen yet, but this is as her position became aware of the inappropriate criteria. she ordered the criteria changed and it was changed in 2011 to no longer refer by name, "tea party patriot." is that correct? >> yes. >> as then deputy, were you aware of the criteria in june- july 2011? >> i was not. >> in january 2012, the criteria was changed again to "organizations involved in limiting expanding government, educating on the constitution and bill of rights, and social

economic reform movements.? the ig report indicates this was made in the cincinnati determination office without executive approval. mr. george, is that correct? >> yes, sir. >> it was changed without executive approval? >> that's our understanding. >> the may 2012 criteria today states organizations with an indicator of significant intervention. the ig report states that it more clearly focuses on the activities permitted under the treasury regulations. is that correct? >> that is correct. >> i have no further questions. >> i yield to the chairman of the oversight subcommittee. >> thank you, mr. chairman. on march 22nd, 2012, the subcommittee held a hearing in

this room and i specifically asked the then commissioner shall men about reports that they have been targeting tea party and other conservative groups and i would like to play the video of his response. could we have the video? [video clip] >> this is the kind of back-and- forth that happens when people apply for 501c4. >> this was march 22nd, 2012. knowing what you know now, was his response truthful? >> it was incorrect, but whether it was untruthful or not -- when you talked about targeting, we should really get into this, because when you talked about targeting it is a pejorative term. --d not defending the list.

and i am not defending the list. what happened here, and by one like to go through the application process, is that someone saw a tea party cases come through and there were the knowledge and that they would be engaging in politics. this is the timeframe in 2010 when citizens united was out and there is a lot to discussion in the system about the uses of c4. there was discussion about centralizing and grouping these cases. the way they centralized it is troublesome. they are not targeting people in that sense. what they're doing is making sure that they are putting them in -- >> let me ask you this. you said "incorrect but not been truthful." was he not informed of this process? >> to my knowledge, i do not think he knew at the time. you set the technical adviser to cincinnati.

there were press reports and there were notices from chairman camp and myself dating back to 2011. and you are saying he was not informed of this? >> let's divide this into a couple of pieces here. >> let's divide this into a couple of pieces here. used.was a list that was there was the processing of the cases. we were aware there were issues in the processing of the cases. we were not aware of the lists. i asked in late march, after the hearing, for us to go in and take a look. i thought there were problems and they came back with both pieces. there were problems with the cases and the listings. >> you were given a briefing on the improper selection based on political belief and everything was, i think, may 3rd, 2012. is that correct?

>> so i would characterize your question. i was informed of what we had been informed of to date. tigda was in there and there was a use of the list. the list seems obnoxious to us, as it does to you, and we are going to take action. that was in may. >> you say it was not targeting, but was only one side of the political spectrum singled out? >> look. they get 70,000 applications in there for people to do. they triage them into a mix to get technically fixed up and some go for substantial of questioning. politics is an area where we always ask more questions. it's our obligation under a lot to do so.

>> i understand the process. we have received letters describing process and we're trying to get to the heart of this letter. you were told tax-exempt organizations were being targeted if they contained terms like tea party, we the people, and so forth. knowing these practices can be -- you sent letters to congress of knowledge. consistently omitted that such discriminatory practices, that are allegedly, are in fact taking place. why did you mislead congress and the american people on this? congressnot mislead or the american people.

i answer the questions as they were asked. >> why did you not tell us about the terms? >> the time has expired. >> mr. george, you are the inspector general at the treasury? >> correct. there are three inspector generals in the department of the treasury. i am exclusively for the irs and the system of tax administration. >> you were appointed by then president bush. >> correct. >> you were appointed by then president bush. your report was no outside groups were involved. >> as of now. >> was the previous commissioner? >> douglas schillman.

>> appointed by then president bush? >> correct. >> he was commissioner when these outrageous activities were going on, which both sides of the aisle recognize as outrageous. >> correct. >> prior to commissioner shulman, the last political head or political appointee of the irs was mr. mark everson, is that correct? >> yes. >> he was also appointed by president george w. bush. >> yes. >> it is believed that groups like the naacp, progressive churches and environmental groups were targeted by the irs. mr. miller, while you were appointed acting commissioner at the irs, you are a career civil servant. is that not the case?

>> yes. >> you are not a political appointee. >> i am not. >> what i'm trying to basically debunk is the nonfactual statements by chairman camp to link these scandals to the white house or solely targeting of conservative groups. i asked the questions of ms. lerner last week as to whether or not the irs was investigating political not for profit organizations. she got involved after she was asked a question at a press event and that is simply understandable. what i also think is important,

at least at this point in time, i would hope is in a bipartisan -- simply unacceptable. what i also think is important, at least at this point in time, i would hope is in a bipartisan context because we want to find the facts. we want to find out who knew what and when and what steps were or were not taken. i was just as outraged when i was learned when she was asked the question why she did not tell congress. i asked her and she did not answer. we are outraged. i did not believe any political organization should be targeted because of their thoughts. that's on both sides of the spectrum. i would dare say during the prior administration by mr. shulman and mr. everson that there was targeting a political

entities as well. it has to end on both sides. the president has been very forthright and very strongly condemning that type of action. the entire administration has as has mr. lew. let's get the answers. ask the questions, get the facts, and then we will draw our own conclusions. i yield back the balance. >> mr. green. >> thank you for getting to the truth in this scandal. let's look at one of the tea party groups in my community. the founder, a small businesswoman, applied for tax exempt status in july 2010. in february 2012 she received a letter with numerous follow-up questions that were intrusive but she answered every one of

them and returned them well within the two week time frame. three years to the day that she first filed, her application is still pending. let's look at what happened to her in the three years since she replied. beginning in december 2010, she was visited by the fbi domestic terrorism unit. her personal and business returns were both audited. she received four inquiries and business received unsolicited audits, and questioned audits by osha and the atf twice. this is a citizen and a small business woman who had never been audited by the irs or any of these agencies until she applied to you for tax-exempt status. there's a broader question here is this still america?

is this government so drunk on power that it would turn its full force, its full might to harass, intimidate, threaten an average american who only wants her voice and their voices heard? mr. miller, who in the irs is responsible for targeting conservative organizations? >> i cannot speak to a given case. we talked about 6103. >> this is not just one case. you know we are talking about the whole list the inspector general put up there. who was responsible for targeting these groups? >> again, i take exception to the context of targeting because it is a loaded term. the listing was done -- >> this is not a listing.

you created a "be on the lookout" list. it is not a centralized or mandated listing. you had a "be on the lookout" list and the inspector general already verified. who was responsible for targeting these conservative organizations? >> again. if you read the report, it answers your questions. >> there are no names in the inspector general's report. so i'm asking you not only of the acting commissioner but the deputy commissioner of this organization who is responsible for targeting these individuals? >> i do not have names for you. i'm willing to try to find thatt -- that out. >> you have no knowledge of who is behind this? >> i will stand by what the

report has put out as facts. >> can you of knowledge none of this shared or given to many other federal agency? >> that would be a violation of law and i do not believe it happened. >> you can assure us there was no sharing of this information? >> tigta will look into it, but i would be shocked. >> if your earlier answers are any indication, we will all be reading about it in the media. we ought to be getting the truth from you. >> mr. rangel is recognized. >> thank you. we are all outraged by what has occurred under the bush as well as obama appointees. >> there were no obama appointees. i apologize.

i'm not sure -- what are we talking about? >> once it was discovered that people were put on a look out list, that type of thing, regardless of what you call it, were the people responsible in the treasury department appointed by president bush as well as continuing service under president obama? it is basically the question you have already been asked. >> at the irs, the commissioner was appointed under the bush administration. at the treasury, those individuals would be obama appointees. >> the outrage is not democrat and republican. the president has indicated outrage. you have indicated outrage.

i would assume we are on the same side in trying to determine how this happened, who was responsible, how far does the cancer go, how quickly can we cut it out? so that tens of thousands of irs employees have this stigma of corruption taken away from them that you, mr. miller, a career employee, does not have to explain to your kids and friends that you are not involved in a scandal, that all the people who serve the government -- it's too late for the congress, but it's not too late for the government to try to get its reputation cleaned up for america. i don't want to see anger, but i

certainly hope before this hearing is over that you share with us how you intend to have your voice is heard so that america would know that whether this was criminal activity or a mistake, i don't know, but we have to get on with it. under 501c4, you can make political donations and without saying how much and who made the donation, right? >> under 501(c)(4) organizations, donors and their contributions are not public intermission, is that is the question. >> you can make political contributions? >> you can make a contribution to a 501c4 for political purposes.

>> and you can do that as long as it did not the primary purpose. it can do that for 49% of whenever the activities are without technically violating the law. is that correct? >> the test is whether your primary activity is social welfare in nature. >> you could be 49% political. >> we have never been that precise. >> you could say that. after the supreme court decision in citizens union -- citizens united, whenever. -- whatever. [laughter] the application for this type of corporation increased dramatically, did it not? >> they did double. >> he did not have to be a political expert to realize there was an increase in political donations given to 501(c)(4)s. >> if you look at the reporting on forms 990 on political activities, it will show an explos.of

>> again, it's almost an invitation as the law is written for abuse in terms of political activities for corporations are primarily are supposed to be doing social service work. is that not correct? >> it is something we have to look at closely. >> you should have wanted to look at this earlier before what my friends are calling a scandal. it's wrong to abuse the tax system. this screams out for tax reform, does it not? >> it is an area ripe for redefinition and reform. >> regardless of whether republicans or democrats did something like this, the outrage should still be there. >> outrage as to -- >> the abuse. >> yes.

>> this law has been abused by government employees. not by all of them, but by some come and our job is to find out who they are. all i want to get from you, mr. miller and mr. george, because it is your integrity on the line, the president, the administration, the irs employees who work hard each and every day. and unfortunately the congress is involved. people are losing confidence and i hope that you feel the same sense to find out what caused this, how could happen, and to help us restore confidence that americans should have in their government. i yield back the balance. >> mr. ryan is recognized for five minutes. >> mr. miller, we have now established and you have the knowledge that you were briefed on may 3rd that there was improper criteria used for tax- exempt applications. you were told that tax-exempt applications were being targeted if they contained terms like tea party, we the people, bill of

rights, and those criticizing how the country was run. after that, you sent letters to congress of knowledge in our investigation of the allegations but omitted that discriminatory practices were allegedly taking place. this briefing was made in 2012. then, you came here to a subcommittee hearing on this issue on july 25th where we were investigating the discriminatory filters to hold up the 501c4 applications of groups, specifically told that these groups fell like they were being harassed and you're asked this question. "what kind of letter or action is taking place at this time that you are aware of?"knowing full well these were used to target certain groups you said, "i am aware that some 200 501c4 applications fell into the

category. we did a group these organizations together to ensure consistency, to ensure quality. we continue to work those cases." that was your answer to this committee after you had received a briefing that the targeting was occurring, which you already knowledge was outrageous. the law governing how you must respond to congressional inquiries requires you to tell not only the truth but the whole truth. you cannot conceal or cover-up by any trick, scheme, or device a material fact. how is that not misleading to the committee? you knew the targeting was taking place. you knew the terms tea party and patriots were being used. you just admitted they were outrageous, yet when you're asked about it after you were briefed, that was the answer you gave us? how can we not conclude that you misled this committee?

>> there were a lot of questions there. >> its one. how can we conclude you did not mislead the committee? >> i stand by my answers then and i stand by it now. that implies political motivation. there is a discussion going on. there is no political motivation. >> let me ask you again. >> may i answer the question? >> let me give you some clarity. here is the question you are asked. [laughter] what kind of action is being taken place at this time that you are aware of? >> the discussion of the context of that, and again we need to go back to look at the context. there was a listing and the treatment of cases. my understanding is that the treatment of the cases, because all the letters that they were talking about, i'm hearing that people are complaining about letters.

we have dealt with them as have been explained and we went to them to talk about the ways they could answer it and we dealt, i think, fy and ccessfully with this issue. >> you knew of our concern with the targeting in the allegations reported to the committee. we brought you here to talk about it. you knew of our concern. you said in your answer that you were aware of some that fell into the category to ensure consistency and quality. you did not mention targeting based on buzz words like tea party, patriots, or 9/12. do you not think that is a very incomplete answer?

>> i answered the question truthfully. >> you give us a list the other day of approved tax exempt applications for advocacy organizations through may 2009. we do not know how long these applications sat or how long it took to process them. just from mr. rangel's question and earlier testimony, the irs was doing this because they're concerned about political actions by nonprofits. some of these approved that were approved or chattanooga organized for action, aggressive leadership alliance, and progress of usa. if you were concerned about political activity, did you have targeting lists that contain less like "progressive" for "organized" in their name? >> let's take a step back and i walk you through the process. we centralize cases based on political activity. we take a shortcut on some of

it, but we collect, to be blunt, more than a tea party cases. >> there were no progressive buzz words used. >> we collected more people because any time it was seen -- >> time is expired. this issue has brought us together in a way unlike anything we have seen here. we all agree these applications were poorly handled and that the irs stiffed on this at best. public service ought to be held at a higher standard. the irs is an easy target and everybody wants to get a pitch fork

when the tax man comes. when our 24 hour media cycle is getting hundreds of different? -- different facts, there is a difference between stupid mistakes and militias mistakes. examiners took a shortcut which they clearly regret, deeply regret. the report says, in black and white on page 7, the determination of employees stated that they considered the tea party criteria as a shorthand term for all potential political pieces. these applications were singled out for their names and policy positions, not for the activities, which they should have been singled out for. some of these political groups are delaying getting their taxpayer status. that is wrong.

as much as i dislike the right, i think it is and wrong to be on unevenhanded. especially in government application. the inspector general report said no one acted out of malice or political motivation. i want to know if you still stand by that. >> we have no evidence to contradict that assertion. >> we want to root out the causes of this. it all started right after citizens united. people saw the door open, we could get in and to political advertising. we will not have to report anybody's name. applications for secret money, political organizations, increased by four fold after that supreme court. this small group of people in the cincinnati office grew up.

nobody is going to deny that. they simply screwed up. this committee messed up by not giving any clear criteria for what a real charitable organization is. the law is not clear and people have to make judgments. that means we have to collect a lot of data to try to figure out what people are actually up to. mr. miller, there is clearly a problem in our current way of determining what a primary purpose of an organization is. i want you to think about what i am talking about. as i watched this conversation shift from what is right and wrong to the irs's problem. we could have appealed that along with obamacare yesterday. it is also about republican storyline in this agenda. we need to find some truth here.

i have heard members of this committee now talk about it. the irs cannot access your medical files, is that true? >> correct. >> they cannot find out your private medical information. >> that is correct. >> their job in obamacare is to simply collect paid financial information on which a determination is made on whether somebody can get a subsidy for their premium. is that correct? >> it is not a fascist takeover of what is going on here of the health-care system. let us not forget that the virus is one of the hardest and most-- the irs is one of the hardest and most heated jobs and there are thousands of hard-working americans who work every day to run the system. a couple of people make a problem. that does not damage the organization, in my view.

you get rid of the people who make the problem. i would like to hear, mr. miller, what he believed would make it so that this would not have happened before? >> there are two things, sir. i appreciate the kind words. we are a hard-working and honest group, frankly. that seems to be forgotten in all of this. with respect to political activity, it would be a wonderful thing to get better rules, to get more clear rules. in terms of our ability to get to this work, it would be good to have a little budget that would allow us to get more than the number of people we have to do 70,000 applications and do our job in looking at whether or not an organization is tax exempt. >> time is expired. >> thank you, mr. chairman. mr. miller, do you know the

director of the irs is presented as the position of lois lerner? were you aware she did not acknowledge the investigation at the time? >> i did not know that. >> were you aware that the irs was preparing a statement to put out during this time last week? >> yes. i did not know whether we knew it at that time not. >> what did ms. lerner know when she testified before the committee? >> i do not know that. >> did you know that ms. lerner was going to appear last friday, may 10, on a panel called "news from the irs and treasury of the american bar association conference." >> i did not know the topic. >> did you or any of your support and its director to make any of the public statements acknowledging that targeting of groups?

>> it was a prepared q&a. >> do you know the member of the irs is advisory council on tax amenities? >> i do. >> was she questioning mr. lerner about targeting conservative groups. >> i believe we talked about that. >> did you have any contact, either by e-mail, phone, or in person, with the white house regarding the targeting of tax- exempt groups from 2010 to today? >> i did not. >> how about the department of treasury? >> i would have had some conversations with treasury in my role as acting commissioner because i reported to them. on this topic it would have been i have to look back. i believe that conversation would have taken place. >> how about president barack obama's reelection campaign?

>> no. >> did you have any contact with organizing for action? successorrica or it's action?ing for >> no. >> did you have any contact with anyone associated with pro- publica? >> when this whole thing came out i think the irs might have talked to them. >> something that would probably clarify your involvement in this would be if you submitted to this committee your e-mails, phone records, and 2010 schedule until you resigned. >> i will see what is appropriate. >> we could subpoena those records. >> i will have to talk to my agency. you are asking me and we will talk.

>> i would suggest that we work hard to get those records. i would also encourage you to contact your colleagues to testify before this committee at their earliest possible time. i just have one last question, mr. miller. you really are not taking any acknowledgment that you knew anything or did anything wrong. you said that numerous times on the record today, you did nothing wrong. i find it hard to believe -- why are you resigning? >> i never said i didn't do anything wrong. what i said is contained in the questions. i resigned because as the acting commissioner what happens in the irs, whether i was personally involved or not, stopped at my desk. i should be held accountable for what h

whether i am personally involved or not -- those are very different questions. >> i hope you would be willing to submit all of your e-mail, phone records, any personal meetings you have had in the past four years, i think that would really keep your reputation in good standing with this committee and the american people. >> we will have to talk about that. i am not saying no. >> thank you, mr. miller. >> mr. mcneal is recognized. >> thank you. you referenced an article from "usa today." there were democratic leaning organizations that were the focus of the irs as well. >> without objection. >> thank you. when i woke up this morning i went to my phone and i was

curious about what the word of the day would be. you have rejected the term "targeted." >> i think it is a term that implies something that did not exist. >> by sheer irony this morning, they used the term "litmus test," which it defined as a single factor as an attitude or event that is decisive in choosing these organizations. would you say this was a litmus test? >> if it was a litmus test it was political activity. >> i have one of my constituents who contacted my office yesterday, outlining a pretty egregious situation. he is treasurer of a small nonprofit in massachusetts, a volunteer organization.

their association was told by the irs employees that they were not required to file a 49-90. this past november they received a letter saying their tax-exempt status was revoked without the proper forms without any defense notice. the irs told and they no longer needed to file the forms but instead of notifying them first of the problem and allowing them to fix it, especially in light of the id by steeper given, the irs went ahead and revoked the tax-exempt status. they now have to reapply and pay. this is a nonprofit that has been around for 60 years. a taxpayer should not be intimidated by the irs. there is broad agreement by that. the american people should not be afraid if the irs. there is broad agreement on that today. we should rely on the advice they apply. and not be punished for it.

i hope we will have the opportunity to work in this specific and central issue. i want to turn to the topic of recent focus by the irs. that is obviously the question today, the allegation that there are political views that have cost them to be that focused. we all know that is outrageous and acceptable and a thorough review will get us to the bottom of this to ensure that never happens again. let us not forget something this morning, even with the egregious actions that have been acknowledged by the irs there is still an underlying problem here, and that is 501(c)(4) being engaged with politics. the irs was flooded with applications seeking 501(c)(4) status. why is that? it is in large part because super pacs must disclose their donors. we have many disagreements on this committee between this and the parties.

we should be able to agree on that whole notion of disclosure. the case that unleashed a torrent of money in public life was in 1976, which the court held that money was enabled in speech. includedt electric ."ght, the most efficient as part of our scrutiny as think we all ought to be able to agree based on this problem here today that the simple act of transparency and disclosure would alleviate much of what has happened here.

there wasn't this rush because they wanted to join the sisters of mercy in common cause. it was not to hide the donors. i am hopeful we can get to the bottom of this. let me ask you this, has anyone been disciplined directly related to this development review approval and use of inappropriate criteria? and have any corrective actions put in place to ensure this does not happen again? >> the answer to that is yes. in may when i was told this i asked the management there to reassign an individual who had been involved in these letters that were objection. i also was aware that -- as i mentioned in my statement now that they are out with the facts will be able to look again.

i should not just because -- i have to be careful here. the oral accounts may not have been involved so what was done in lieu of that was all the managers in that group were brought in and walked through the new processes and explained that this was no way to behave at the irs. in terms of the future, the listing cannot be done and cannot be changed. >> thank you. >> thank you, mr. chairman. in january 2010 an organization called liberty township key party in ohio applied for tax- exempt status.

there is no resolution to their application. they received 35 questions that i have in front of me in march 2011. there were 94 questions when you look at all of these of questions. copies of all activity on facebook and twitter, resumes of all past and present employees, whether a past or present employee or their family members plans to run for office in the future. i would like to submit a copy of the article from yesterday that references this. in the article, and i quote a board member from the liberty township party. "we are an educational staff. we cannot endorse candidates, we do not man phone banks. we do not do any kind of political activities." >> without objection, the article to be placed in the record.

>> question 26 of the questionnaire to the tea party group is as follows, "provide details regarding your relationship with justin thomas," an american citizen in the audience today who does not know why he was question no. 26. the dispatch article goes on to say he was shocked when he found out that the irs is asking questions about him of a group that he barely knew. he was involved in a cincinnati tea party and served as a spokesman. the obvious question that comes to mind are why am i being targeted amongst all of the others? where does this information go? does it get shared with other government agencies? do i get an audit? is it against my business?

all of those things go through your mind. he does not know why his name was question no. 26 for an organization who still hasn't received approval since january 2010. the article goes on to say the democratic gov. ted strickland, a former governor of ohio, filed for tax-exempt status in august 2011. they were approved nine months later. mr. miller, another organization in ohio, the ohio liberty coalition. this is their documents in response to irs request. this is only part of it. all of these documents were not enough for the irs to approve their application. in fact they applied in june 2010.

they finally received approval in december 2012. one month after the november election. another young lady i met in the group indicated her group had a book club and the irs listed all the books they had read and a book report from the group. you cannot make this stuff up. this is unbelievable. i do not know how you can defend any of this and i do not know how you can say this is not political when the liberal group got a tax-exempt status and three did not mention for over two years. who was mr. lerner's boss in 2011?

>> i believe it would have been -- >> ingram? >> part of that time and another gentleman. >> he has since submitted his resignation? >> when she did today? >> she works in the affordable care act? >> who approved her to that position? >> i approved that position. >> why would you move her to a position who was in charge of the extent division or as station, which certainly has had some controversy over the last couple of years? customervided horrible service. i will admit that. horrible customer service.

and americans still does not know to this day why he was numbered question 26. >> time is expired. >> thank you for your testimony. let me tee off with something you just said. you said foolish mistakes were made. i think the president said it better, "the handling of those tax applications at the irs was outrageous and intolerable." no excuse. as much as we know that the folks at the irs have a thankless job because they have to go and tell their fellow americans that they may be audited, they do this work understaffed, we have to maintain confidence in the system.

>> agreed. >> you are right, it was a foolish mistake. the president is even more correct in that it is outrageous and intolerable. let me focus on something you said. when you're asked if there was any finding or evidence of political motivation you said no. >> that is correct. >> would find is a situation -- what we find is a situation where inexcusable activity took place. i think it is unfortunate for those who are in positions of authority. the buck has to stop somewhere. that cannot diminish the work that has bn ne by ne in the ir

i hope you understand it you are here today talking to us because we need to get to the bottom of this. we need to clean up and clear up some can go back to the business of making sure people respect the fact that we have a voluntary system of paying taxes. let me ask the question of mr. george. in your report you indicated, that "there appeared to be some confusion by the determination cnet specialist and applicants on one activities are allowed by internal revenue code or by 501(c)(4) organizations. we believe this could be due to the lack of specific guidance of primary activity a 501(c)(4) organization. they should have social welfare as the primary activity of their mission. however, the regulations do not

define how to measure whether social welfare is an organization primary activity. the question, could some of these delays have been avoided if there were clear guidance on section 501(c)(4) organizations? and with the primary activity constitutes? >> the direct answer is yes. i should note that the determination to it did seek clarity from washington headquarters and it took months before they received a response. >> that is a great way to leave it to mr. miller. what we have been saying for quite some time, many of us, is that there is not clarity in what is social welfare.

you have many see for organizations, these non-profit organizations, who are trying to do good work. they are being painted by some of these organizations doing nothing more than political activity. the supreme court gave the license to use a nonprofit status to do politics. is the law clear in your mind on what is political campaign activity? >> it is very difficult, sir. >> can you distinguish between sections 501(c)(4) and a section 527 political organization? >> that is difficult. presumably the level of political activity and expenditures needs to be less in the 501(c)(4) area. >> let me suggest to you to go back in your opportunity with fellow employees at the irs and

mr. george your capacity as inspector general, thank you for your service, to please communicate that you need to give us your sense of what is the best guidance. we do not have this proliferation of organizations that are abusing the nonprofit status at taxpayer expense so that we will not run into this situation again and the american people can have confidence in their system and government. i yield back. >> mr. reichardt is recognized. >> thank you. i have about 15 minutes to question you, but i only have five. i am disappointed. i'm hearing a lot either no, i don't believe, i do not recall. you did not even know who

investigated the case but he said it was investigated. i am puzzled by that. you are not instilling a lot of confidence in this panel and the people across this country. i want to go back to your version of the word "target" or "targeted." you said there was no targeting because there was no intent. would you not agree that certain groups were treated differently because of their name or policy position? >> i believe -- >> where they treated differently? that is the question. >> no. >> no one was treated differently? >> may i answer? i would like to be broader than a yes or no. my understanding is that the cases that went into this queue is that it included elements for a political spectrum. politicalout the

spectrum. that of the 300 cases that were looked at by the treasury inspector general 70 of the 300 had "tea party" in the name. >> i am going to take my time back. i am not going to be delayed here. your answer was no one was treated differently. to take back to mr. ryan's question, you knew the groups with the term "tea party" had automatically been suggested to extra scrutiny. you would acknowledge your investigation as to whether groups were being treated differently. didn't this committee have the right to know? >> i answered all questions truthfully. >> didn't this committee have the right to know that groups

were being treated differently? you had this group of 200 or 300 did not this committee have the right to know. >> i answered all of the questions i asked.-- i was asked. >> your answer is a non-answer once again. it is an easy question. do you not think the congress has the right to know all the information? does this committee have the right to know the information that you knew it? yes or no? you testified before this committee. mr. miller, you testified before this committee and you did not provide the information. you did not share the information you need. my question is do not believe -- this is the united states congress that you are accountable to which is

accountable to the people and american citizens across this country -- do you not believe that it is your job to provide us with the information that you knew so that as you said the people of this country can be properly served honestly? you are a law enforcement agency. i was a cop for 33 years. you raised your right hand today. did this committee have the right to know what you knew? yes or no. >> i answered all questions truthfully. i will also tell you -- >> i am going to mr. george if you are not going to cooperate with me. you have been not cooperating with us. mr. george, we heard in the early draft of your report indicate you are unable to determine who cost the irs to target groups based on their political beliefs.

is that true? >> yes. >> you are the commissioner, who is responsible? >> i do not have that name. >> why not? have you asked anybody? >> yes. >> who did you ask? >> i did not have that name. >> it is the gentleman from washington state's time. >> who did you ask? >> i asked the senior technical adviser. >> what was their name? >> nancy. >> what did nancy tell you? who is responsible? >> i do not remember. >> you do not remember again? >> time has expired. the committee will recess for 15 minutes. [captions copyright national cable satellite corp. 2013] [captioning performed by uttional captioning ine]

[gavel] committee will come to order. everyone, take your seats. >> thank you. what happened here is outrageous. it is inexcusable. unless those of us who strongly disagree with the tea party on many issues defend it from any impairment and allow it to be what it wants to be, we impair our democracy. thischarges have been made morning. you as inspector general under title v section to have a statutory responsibility as inspector general to present and detect fraud in the programs and

operations of the irs. do you not? >> that is correct, sir. have fulfilled that responsibility faithfully and forth rightfully. if using the extensive audit and investigation powers that you have as inspector general, you have found any evidence of corruption at the irs? >> no, not at this time. --with this expensive power, extensive power, it if you have found the taxes to rotten at the core? >> not rotten at the core. using your statutory powers and for filling your for who wins and loses in america? and the statements that were ate in inflammatory charges the beginning of this hearing,

it is obvious to have no basis in any facts to mr. did this morning. it is important in addressing and fully correcting one wrong, we not involved in other rocks. such a as encouraging the proliferation of secret, , but that it be tax subsidized, it secret, corporate money. using this incident as a basis for putting more of the burden of financing our central government services onto working people. that we not permit those who have an agenda to try to undermine the full and implementation of the affordable health care act so that the health care crisis is intended for families across this country.

that is what is at stake here. that is what has been discussed here. any fact based on associated with this .nvestigation to this date as indicated by the republican appointed inspector general who stopped it was to determine whether these charges have job it was to determine whether these charges have merit. i do not believe there is any lack of clarity in the statute. the statute that is in effect has been in effect for decades. it requires that before there is as thempt status, ,itizens for responsible ethics you are to be denied the status if you are not exclusively engaged in social welfare.

according to the statute. is that not correct? explicit. >> i have to -- that is a tax policy question. i am asking for a clear reading of the statute that has been in place for decades and is in place today says there should be a denial of tax exempt status, and a group not exclusively engaged in social where for operations. it was only after a regulation adopted long ago, long before any of you were at the irs, that changed exclusively to primarily that there was in the discretion for this section to be involved in this operation. >> we have indicated some

clarification from those in the policy area of the department of treasury might be needed to help clarify. >> the citizens for responsibility and ethics filed a petition with the treasury department and the irs to adjust that. beene statute had followed, we would not be having to deal today with selective enforcement. we would not have any problems with enforcement in this area at all. i hope that petition is honored and responded to promptly as i believe you have facility responsibilities, mr. george, as inspector general. thank you for your testimony. mr. miller, thank you for yours and for stepping aside. >> the time has expired. --mr. miller, you may act you may object to the word targeting but it is used in the report 16 times.

a common understanding of the word so i would just suggest it is a well settled doctrine. you admit that you spoke with ms. lerner about the planted questions beforehand. can you tell us more about that conversation? >> i did not speak to celia and i believe i did talk to lois about the possibility now that the report was finalized and we knew the facts and have it bonded in writing and everything was done, didn't make sense for us to start talking about this in public. >> can he walk wanted to the logic at the time were you thought it would be a good idea to make it public disclosure to the american bar association rather than following on your duty to disclose that to the house? >> we were going to do it at the same time. our attempt was to talk to you all of the same time. >> but that did not happen, did it? >> it did not happen.

>> what of the recollection did you have when you talk with ms. lerner about this game -- this scheme? >> i am not sure what you're asking. >> what's your recollection of that conversation. >> we talked about what would be said and how we might do it. >> where did the conversation take faith? what over the phone. likes what they? -- what day? >> i would have to look back. >> do you have notes or don't you? >> sir, please. i don't know. >> a little while ago, you were with mr.you engaged riker on the question as to whether you knew this committee, the idea of does the committee

have the right to know this information then you sheltered yourself on this idea of i have always told the truth. let's set that aside for a moment. am are a lawyer and i lawyer. in the process of a discovery when you find subsequent information, counsel has a duty to disclose that to the opposite party. ,here is no perry mason moment no litigious situation where somebody comes in and says we are just showing up with this information and we have not disclose it to the other side. don't you acknowledge that you had a duty based on your testimony before this committee of what your actual knowledge was? didn't you have a duty to come forward and disclose that based on all the inquiries that happened from the ways and means committee directed to you? >> what was happening was i was in possession of some fax -- some facts.

we did an internal review to see what we needed to do to get the cake moving. the processing was bad, the listing was bad. they were getting all the facts. we were going to wait for them to get the facts. so i did not come in to give you facts that were not correct. >> so you were not concerned of the timing of the investigation when you and ms. lerner made the decision to move forward? >> it was done. facts and made our written response. >> in other words, you have the actual information. the totality of information that you're describing today, you had it all in your possession at the time at which you were under a scheme with ms. lerner to do a planted question. is that right? i bet to the term scheme. -- >> i object to the term scheme.

>> a manipulation, call it what you wilt or you had the information. >> we were reaching out to the committee at the same time. >> what form did that outreach take? caled to try to get on the calendar. >> is that all you got? >> it's the truth. >> i find it ironic. on the one hand, you're arguing that the iors is not corrupt but the subtext is you're saying we're just incompetent. is a perilous pathway to go down. there is this notion that has not been satisfactorily answered. if the targeting was not targeting, how come only conservatives got snagged?

>> they did not, sir. organizations from all walks and persuasions were pulled in. only 70 of the 300 organizations were tea party organizations. tothe as in contradiction the ig testimony. i yield back. >> mr. thompson is recognized. i want to get to the bottom of this. i want to make important -- i want to make sure we are able to do all that we can to prevent it from happening again. for all the same reasons that many of my colleagues on both sides of the aisle mentioned today. i want to associate myself with the outrageous and -- out rages group as to where i think this

ranks. , in youreorge testimony, you had a section titled results of review please see the irs used inappropriate criteria for identifying these organizations. is that legal? i am trying to get a sense of what -- it is not illegal. inyou enumerate them appropriate criteria were developed as a template for a total of more than 18 month. is that illegal? >> that is not illegal but it was inappropriate. >> i'm just trying to get a sense. >> it is contrary to treasury regulations and other policies in place by the department.

>> the substantial delays, is that illegal or inappropriate? >> it is inappropriate. -- unnecessary information in a legal or -- illegal or inappropriate? >> inappropriate. >> he also outlined recommendations you think are most critical and explain if they are enough to prevent this from happening again. are they? >> the vast majority are. >> do you have some mechanism for making sure they are put in place? is there a plan to go back and review these and continue your good work of review to ensure your recommendations are being followed and that they are

enough to protect the citizens of our country? anticipated almost our entire future plans. we are going to take a look to see whether the irs has -- thefully implemented president indicated he was going to ensure the irs complies with the recommendations and it would definitely be our intention to follow up to guarantee that has occurred. >> one of the responsibilities we have is also an oversight responsibility. is there something in your recommendations and plans that will keep us in that loop? or are we going to have to find out about this outrageous and intolerable behavior through some other means? >> we publish an audit plan each year laying out which audits we

are going to engage in. we request information and solicit ideas from congress, the administration, and anyone who has a tangible role in the system of tax administration. it is our intention to once again do that. there is no doubt in my mind that we will follow up with congress on this matter on a regular basis. >> thank you. mr. miller, what are your obligations in regard to reporting this type of behavior to congress? >> i don't believe there is an obligation. but what happened here is -- i knew it was in in may almost immediately but we were involved. we had a meeting with mr. jordan company in may where there is an

indication they would be done in the summer. our understanding is they were going to get the facts. there was never the believe these facts will not come out in full. >> general george, is there a need to pass specific legislation that would make it more difficult or impossible for this to happen again and to strengthen the requirements for reporting when something this outrageous and intolerable takes place? >> i will answer your question in full but i have to preface that the secretary has delegated tax policy questions to the assistant secretary. >> time has expired. you can supplement that answer in writing, if you wish. inspectorng to the general general's report, the irs started its inappropriate

handling of certain tactic didn't applications in 2010. organizations applications in 2010. let me highlight two pieces of media articles that appeared. in september 2010 there was an article in in the weekly standard concerning the industry thate there had been taxpayer information potentially in the hands of senior administration officials that were part of a august 27 2000 briefing. a few days ago, and the usa today, there was a column they a gentleman -- by a gentleman who oficates that the release

this organizations confidential tax return to the human rights campaign is a canary in the coal mine of irs corruption, that the targeting of tea party groups was in the judgment by low-level bureaucrats. this suggests the possibility of complicity at the highest levels of politics and government. back to whether there was an information sharing of taxpayer with anybodyturns outside of the irs, mr. miller you indicated in testimony that you never spoke personally or communicated personally with anyone in the white house about the sharing of confidential taxpayer information. is that correct? >> i believe so. >> do you have any reason to believe at some point you did promise -- to speak to somebody in the white house or communicate in another way with somebody in the white house about the hearing -- sharing of

confidential taxpayer information? >> i don't think that would happen. >> the answer is no? >> i don't believe i did. >> are you aware of any other irs official that communicated with anybody in the white house concerning the sharing of confidential taxpayer information to somebody outside of the irs? >> you asking whether -- >> whether you are aware if anybody from the irs communicated or spoke with anybody in the white house about the sharing of confidential taxpayer information? but i don't believe so but what i can use the about --but what i am confused about, are you talking about whether i believe we shared information? >> if you have information or knowledge of the information being shared with somebody outside of the irs in violation of section 6103? >> i have no knowledge of that.

did indicate previously that you did speak yourself with treasury department officials regarding the sharing of information. i'm not saying the white house of the treasury department. is that correct? >> i don't think so. >> let's be clear. i will ask more directly. did you ever speak or communicate with anybody in the treasury department who was not within the irs about the sharing of confidential taxpayer information in violation of 6103? >> can i rephrase it? i don't know the answer. if you're asking if i ever shared 6103 -- >> i did not ask that. did you ever speak with anyone in the treasury department not within the irs about the sharing of confidential taxpayer information? >> i don't believe so. i don't know if you're talking about the subject which would be

fine to talk about or -- >> that's what i'm trying to inquire about. so you're saying today that in no no time from january 2010 to present you speak to somebody in the treasury department about the sharing of confidential taxpayer information? >> no, i am saying the following. >> did you ever do that? or communicate, by e-mail, by fax? >> i can say categorically i never shared information. today ever talk about the rules around it? i don't think so but that would be permissible. >> you were aware of news reporting about the national organization for marriage and the concern they had about the sharing of their confidential information. you indicated you were aware of that hoary. -- you were aware of that story.

but i don't believe so. will you check all of your records to get back to the committee about whether your answer is different than what you're providing right now? >> yes. >> time is expired. why don't we move on to mr. kind? >> thank you for your testimony here today. , let me start with you. i assume you agree with the premise that if there is an agency in the federal government, this needs to be above reproach and no hint of bias, unequal treatment to any individual organization, it is direct. >> i agree to request the optics of what happened there and the cincinnati office, this is what comes from it. is that right? >> the perception is that. >> based on the ig report, the

irs is trying to ensure this does not happen in the future again. >> we will implement all recommendations and that will not happen again. >> the question of accountability. you rented your resignation to the president. he has accepted that. is that right but mark i have done so to the secretary. >> any other instances of accountability? does at day cincinnati office. >> there were two instances where there was a reassignment and counseling suggested but we now have possession of the facts with respect to the report. now is the time we should be looking at that.

>> any difference of opinion? is there any rule for the congress to work with the irs to ensure nothing like this happens in the future? i'm thinking of citizens united and 70,000 applications committed -- 70,000 applications submitted. ?s there sufficient personnel >> there is not sufficient personnel. >> i don't think we will have many recommendations as far as allocating more resources so you are sufficiently staffed to deal with the influx of applications. we have to share some responsibility as well but mr. george, part of the problem is the definition of the criteria seems to be an inherently

subjective criteria. with no clear bright minds or rus. i think the irs is trying to further define tt for e division in cincinnati but is there further tightening of that definition which would be helpful to irs personnel when it comes time to review the applications? asked the answer is yes. -- >> the answer is yes. is there further tightening when it comes to reviewing applications? >> it is my understanding the irs can do this on its own without legislative fixing.

>> obviously, this committee needs to work with i.r.s. too to ensure it is done orse it will be a flawed -- otherwise it will be a flawed process, special with the huge influx of applications. i think it is so important that it needs to be reiterated, mr. george, i apologize if you think you made yourself clear on it. you found no partisanship of the use of the criteria for selecting applications in the cincinnati office is that right? >> that is correct, sir. >> that is clear in your report too. anyone outside of the i.r.s. involved in the review? >> not at this time. >> not white house or treasury? >> that is direct, sir -- correct sir. >> thank you, mr. chairman. i think if i'm sitting at home trying to figure out what is going on here and listening to the testimony and the remarkable revelation some of these questions, you get somic?-- you get some snickers after some of the,m but you have the federal government asking what book you read, having the federal government ask you if you know someone is going to run for political stuff. this is chilling stuff. this is very, very serious.

do you accept the findings of the i.g. report? >> we do, sir. >> one of those findings that groups that were targeted, do you accept that finding? >> i would not characterize it as targeting. >> would you understand why the inspector general believe that groups are targeted? >> i think the group that were put into the centralized grouping would have gone in whether we have done the correct thing or -- >> you describe a list of criteria being used to identify these groups as obnoxious, correct? >> correct. >> it is not just tea party groups, it is not just conservative groups. they are religious organization, are they not? >> i don't know that, sir. >> are you not aware that there were religious organizations that were identified by the list of criteria that was formulated?

>> i'm unaware that there were. i looked a the list but very quickly. >> there were baptists churches that were identified for further scrutiny. >> who is sara? >> she an executive at the internal revenue service, she does the affordable care act work frs us. >> where did she work from 2010 to 2012? >> someone has corrected my prior comment, i think. so 2011 and 2012 she was already working on the affordable care. i don't know when in 2010 we medicine that -- >> did she hold the tight of the directors title? >> she was the commissioner. >> she had responsibility over the concerns we're discussing today.

>> at the time she was the division commissioner pe. >> would she have known about the list of criteria? >> i have no reason that she would. >> that she would? >> i have no reason to to believe that she would. i don't think so. >> you don't think she knew about the criteria of the folks that are under her responsibility? >> they were a couple of thousands folks. >> have you had that conversation her? >> no. >> so you never asked if she knew >> i don't think she was in the jab at the time, sir? -- in the job at the that time, sir. >> then you ask about the oversight? >> correct. >> who appointed her? >> i moved her into that job. >> you've also said that in the context of the criteria list and what we're talking about today that the i.r.s. "provided horrible service," correct?

>> i think that's correct. >> that's what you said earlier today. the individual who was overseeing a portion of this and had responsibility for the provision of this "horrible service" now sits over the entity at the i.r.s. that will determine whether or not people are complying with the rules. is that correct? >> i don't think so, sir. >> she is is not in control? >> we would have to go back. >> i don't think your timeline works perfectly, sir. there might be a peed of time-- might be a perioed of time when she was still in that job but she transfered. >> in questioning you said that the i.r.s. would not have access to medical records, is that correct? >> i believe that is correct.

>> so it is unnecessary for them to gain access to medical records, correct? >> i didn't -- i think so. >> isn't that how you described the questions and the information that the i.r.s. folks were gaining through the criteria list unnecessary? >> i think -- are you talking about the letters? >> i'm saying there is a parallel here in the nature of what the i.r.s. has done. do you want to characterize the word? is it illegal? >> it is not illegal. let me understand the question. what is your statement as to what is illegal? >> do you believe it is illegal for employees of the i.r.s. to create lists to target individual groups and citizens in this country? >> i think the treasury and inspector general indicated that otherst not be.but will be able to tell that.

>> what do you believe? >> i don't believe it. i don't believe it should happen, don't get me wrong. it should not happen. >> thank you. >> thank you, mr. chairman. i appreciate the opportunity for our being able to listen to the witnesses and try to develop a record and people putting forth their own ideas, their own question, clarification. i think, mr. inspector general, you have provided a tremendous service with the report. it is straight forward, identifying mismanagement, inappropriate activity, and i hope that people will be able to actually read the report to reflect on it. i appreciate your being here, mr. foreman miller.

it is -- you have accepted responsibility and resigned. it is a error that you don't often see in the political arena, i would say. but i'm hopeful that we can continue to probe, to direct, make sure that no political entity is subjected to inappropriate activity on behalf of the i.r.s. i appreciate some of my colleagues talking about efforts that we can do to clarify laws and regulations together to be able to make sure that there is less ambiguity and better standards. i think at some point it would be interesting to reflect on congress' role in what the chairman referred to in strong terms about a tax code. when i came here in the 104th

congress. there were 114,000 employees in the i.r.s. since i've been here congress and its wisdom has expanded the code, made it more complex, and cut dramatically the men and women who are on the front lines to deal with it. their inadequate training budget. we had this testimony just across the capitol before the senate this last week. i really hope there's an opportunity to think about how we support the integrity of the internal revenue service, not just by making sure there's inappropriate or gross mismanagement, there is clarification but we rely on it for it to function. congress has slowly been starving the budget of the i.r.s.

at a time when each of those employees dollars -- dollars spent on the employees gives the federal government about $214 in revenue and for us not make shu it is adequately staffed, adequately trained, adequately equipped invites short cuts and makes it harder to have the oversight and accountability and harder for overall performance. i think it's inexcusable to cross the line. i think it's important that we bear down, we understand, we make sure it doesn't happen again. i also think as the congress has made the code more and more complex given the i.r.s. fewer and fewer resources to administer it, make it difficult

to train. i think it's -- it undermines the ability to take a complex intyty that relies on self- reporting and people having confidence in it. i'm hopeful this isn't something that we slide past. i appreciate, mr. commarme -- chairman in simplifying the code. but i also hope we look at the task they have been given, the budget they have been given and think about maybe a rate of return that would more than pay for itself if we invest in training in management, and having more than 150 people to deal with the avalanche of these applications. i guess that wasn't so much a question. but it is something that will occurred to me and i know mr. miller you have referenced the stress that group is on and how hard it is to keep track. at some point, if you would provide to the committee, not putting you on the spot now, but some reflections on what to do

this right. i think it would be a valuable part of the committee record going forward. we all want it to have integrity, we want it done right, we an to treat the employees and the taxpayers properly. thank you. >> thank you, mr. chairman. mr. miller, i want to talk about the culture of the organization as looking at the notes, your bio. 90,000 employees, $12 billion budget. you've been there 25 years. i'm concerned -- i guess to start off we got a mission statement there. i'm very concerned about the breath and the depth of what is going on. i think a lot of employees probably do a good job but i've been in business for 30 years and run larger organizations. you got a mission statement in terms of working for the american people, doing what is right, playing by the rules, is that something that is internalized at the i.r.s. or is that something on a website? >> i believe it is irn alternativalized.

-- it is internalized and the vast majority of our folk are hard working and incredibly honest people. i'm going tell you and you should hear that as these discussions occur, as, union, it is damaging to the moral of those people. we, you know, it is ultimately damaging to the sense of volunteering compliance, which under lies our entire tax system. let me just say i think there's a lot of good people, at the same time, we have a massive p.r. problem at minimum we do. it can't drag on for six months to a year but we need to get to the bottom of this. in terms of that size organization, who is in charge? whose who is the boss? how does it work? i ran a decentralized business, i had a corporate structure but i had mappingsers and partners.

-- managers and partners. you've been there 25 years. who do you report to? the commissioner in the past, who a do they report to? at what point, when something like this comes up, who is involved? >> the reporting chain and the organization is -- there are two deputies reporting to the commissioner and the commissioner reports to the deputy secretary of treasury. >> who is ultimately responsible? >> the commissioner -- acting commissioner, not the treasury. the treasury relationship is such that they would not be involved. who is responsible for you? who asked you to resign or fired you? >> it would be secretary lew. >> the secretary of the

treasury. the other thing is, let me ask you, there's been two people -- were you terminated or fired? are you getting ready to retired? i was asked to resign and i will retire. >> under what basis do you feel like you're getting asked and one other person got asked but it seems like there is other people in cincinnati and washington and other parts that have not been held accountable? >> i'm not sure what the question is, sir. if i could answer it and tell me if i'm not answering it correctly. >> go ahead. >> we're not done yet. we have the report. we have the sense of the facts. now is the time for those that remain, including the incoming,

acting commissioner, mr. werfel to take those actions. >> it's been brought up with a couple of the ladies that work with you, what is being done about those two? there's a lot of concern about them. they ran a large operation and it seems to be at the heart of the issues. i think it has to be done in an aggressive, clear way in the next week or two. >> i don't know if it will be or not. that will be up to the next acting commissioner. >> let me ask you in terms of the new acting commissioner. are we looking to gate permanent commissioner or is this -- looking to get a permanent commissioner or is this a commissioner for a period of time? >> we ought to have a nomination. >> i hope. i think at the end of the day, leadership matters. getting the right culture, the right environment within the organization, the i.r.s., it needs incredible leadership, incredible integrity and we need to make sure that person, not so

much the acting one, but ther permanent one is the right choice. >> i agree, sir. >> thank you, and i appreciate the this opportunity. let me say a couple of things and i will ask a question. this is not an easy hearing for you or for us. we're outraged on behalf of the american people. that is number one the american people need to deserve to trust their government. it was violated and that violation is unacceptable and outrageous to us and i hope to you. the fact there changes that need to happen, some thanks that you're making but we need to be assured those changes we made -- things happen, investigations have to be done and changes have to be made to ensure the american people that we know that went won't accept bias or discrimination in any way. i think that is clear to all of

us. secondly, this committee and congress also has the responsibility to do this questioning and our own demand for accountability and transparency from you, the administration, from everything that happened. to do it in a way that is not politicalette. i think we have to be -- political either. i think we have to be careful about that. we need to engage in this in a way that is clear, fair, and nonpolitical. we all agree that something has to be done. my question is really about boardly what is going on in the division that happens for the application for nonprofit status. i heard from my office that groups that came to us for nonprofit status, not c-4, which is the issue here. but the backlog of a year. they don't understand why it take so long. they don't understand why they

are not clear about what is wrong with their application. they are not hearing back. given some of the cuts we've made, nonprofit groups in particular but really are --oking to make up stosm gaps looking to make up some of the gaps that are here to be able to raise money and charitable contributions and to make a difference in our communities. i need better clarification of what is the criteria, why they don't hear back, why the applications are taking longer than a year, if there is problems with them and how we can move though process forward. i think we have every reason to ask those questions and get those kind of answers on behalf of our constituents. it goes all of the nonprofit organizations. is there reasons to review an application to a greater depth and there might well be. we need 20 understand that and so do the people making the application.

they should not be in the dark about the criteria or why sitting on someone's desk or why it is receiving more review. if you can clarify for us now, mr. miller, about what the criteria is and how we can help you to make sure you're doing this right. you're in there during the investigation and getting those answers and correcting those and i'm sure the american people have the right process, the fairness of the process, the crier the combra that is being the criteria that's being used and a timely, appropriate responsible and process to american taxpayers and certainly to nonprofit organizations. so you're chance to that will be appreciated. >> it is a big enough question

that will follow up in writing. the process right now, as i mentioned, we have a limited number of people, 140-200 that work on the 70,000 applications that come in for tax exempt status. most of them are 051-33 organizations. they get some instances to issue bonds. they get state tax, property tax exempts, postal rate reductions. these are significant benefits in addition to just tax exemption and we have to look at them. many are small organizations that go through quickly and some are large organizations that we need to take a look at. the largest hospital systems,

are large organizations. then you look at issues within them. we look for, is there private benefits? is there political activity again. c-3 no political activity is permissible. c-4, some. those are things we try to look at. we try to move them along as fast as we can. we do not have enough people. >> you don't have enough staff but you're clear of the criteria. >> time has expired. >> this will be a continuing conversation. >> mr. smith is recognized for five minutes. >> can you define political activity as relates to the agency and the applications? >> political activity has some limits. you need a candidate, you need a

candidate for public office. that sort of what you need for it to be a political campaign activity under 051 c 4 and c-4. >> was it the concern of the political activity that led to the review of applications? >> i believe it was. it was the fact we were seeing more applications indicating a they might be doing political activity and it is an area that is difficult for us. those are very difficult for us to flush out. the decision was made to get them into one group and educate those people. how they started that process

was one of the problems here. the other problem here as i mentioned, was the method of processing these cases was flawed. i think the report and mr. russell's report goes into great detail in the problems that we saw in the lack of communication between the pieces of the service, the letters that were going out that were overly broad. >> how many employees at the i.r.s. would be associated before the criminalization? >> it has limited your ability to educate the public. can i find out as a member of congress, the groups in my district that have applied for and has been denied or there application continues to be in suspension? >> the application until it's done is 5301 information. if it is approved then everything becomes public. they can grant you the ability to see that can happen. >> i yield back. >> time has expired. >> yes, i think there will be restrictions on me sharing that. >> thank you, mr. >> if they send them

in, we said we're not going to you will find them used used in any of these cases. .here were maybe 30 paces i could be wrong on that. more than half were not tea party cases that got these donor list request. , it was overly broad. it was not necessary.

>> mr. george, i will ask the same question. in the cases where donor list were requested, wasn't your finding those with triggered -- those lists triggered further inquiry? >> i don't have an answer to that aspect of your question but i know that 27 list were requested. >> mr. miller, on the safeguards against bias, i think the biaslying concern is that was applied. can you share whether there were safeguards in place that >> let me telld you that we have something on the exam site of the house that has worked remarkably well.

it goes through a committee. .o one person can do this that cuts down on the bias. we do a better job of explaining why we are doing it. we have done it celebrated the issue into the criteria to a higher level in the organization. >> mr. george. >> the 27 -- out of the 27th, 13 were from the tea party. >> the time has expired. mr. davis is recognized. >> thank you for being here everybody i have heard make a statement or comment, every reviewing body that has had an opinion has suggested that there was some behavior on the part of senior level irs staff

those unwarranted, on acceptable and of course should never happen again. there had clear that been management challenges such as who has the authority to do what relative to policy as well as procedures. when did you start the audit? >> our audit began with a request from a congressional --i want to in give you the exact date. i do have that here. was limited2012 were initially contacted by a government staff member and our march ofan roughly

2012. -- we had meetings prior to that but i would refer to march of 2012. >> when did you first learn of the audit or know about the audit? >> sometime in that same timeframe. it would have been in march. >> you knew that this was under way pretty much from the beginning. did it ever occur to have ,ertain kinds of conversations interactions with whoever would be determined as your superiors? i am sure mr. shulman new.

-- knew. we have heard, all kinds of allegations. thathave been suggesting a good thing to notice who is going to to be the next person to go to jail, who is going to be indicted. during your investigation, did you or was it reported to you by any of your investigators that there was any apparent criminal intent or activity on the part of these employees? initialng out of the review of the audit that affect but there will be subsequent review on our part on this

r. ter >> i have not convinced this is a great big political conspiracy. there has been some ineptitude. some lack of serious management procedures used and it hereto. -- used and adhered to. let me ask both of you -- what would be your recommendations to the new commissioner? >> there is no question that this is damaged the reputation of this organization and the new commissioner need to take steps to ensure that we have restored

that trust that is so essential. that is where he or she should take action. >> i would point out, this is one of the recommendations we made -- training is necessary at all levels on a repeated basis of virus staff and especially in terms of -- repeated basis of the irs staff, people need to he kept informed and up-to-date of new regulations and requirements are eclectic and very much. i yield back. i'm most concerned that the irs attempts to clean up and apologize for abusing conservative organizations seeking tax exempt status as the proverbial tip of the ice bag. -- tip of the iceberg.

these revelations now seem to be far from complete. the irs first first revealed that the words he party, satriots and a few other triggered extra scrutiny. since then, more revelations have come to light. i have with me a 150 page estimate given to me by the time it -- thomas more society detailing coalesced organizations throughout the which were given horrible instances of irs abuse of power, political or religious bias and a question of constitutional rights. i will submit these documents to killing what these organizations went through -- i will submit these documents detailing what these organizations went through. i would like to highlight a few of those reported abuses and ask

for your opinion on them. in a letter from the irs office of exempt organizations socialist -- organizations specialist, the specifi pacifict division, to the christian voices for life in sugar land texas from 2011 that i have. yourwere asked, and educational program, do you do education on both sides of the issues in your programs? mr. miller, your knowledge of the 501c3 application -- is that an appropriate question to ask is to mark >> i do not know i can speak to a specific letter. >> let me ask about another letter, this one from iowa. the question asked in the irs --

"please detail the contents of the members of the organizations prayers." would that be an appropriate question to a 501c3 applicant? say i pains me to cannot speak to that either. the king outside of this case which i don't know anything about, it would surprise that question was asked -- speaking outside of this case, which i don't know anything about, it would surprise me that that question was asked. >> another was asked "please detail certain signs that may or may not be held outside of a planned parenthood facility." is that an appropriate follow-up to an applicant? >> again, i don't know what the context would be but that does not sound like the usual question. >> thank you.

mr. george, during your investigation, are you aware of the three letters submitted i senators baucus, schumer and -- writtento the irs to the irs asking for certain scrutiny? >> i am aware of it but i don't know the details. >> in your investigation so far and questioning employees of the irs, did you ask them specifically whether these letters from sitting united states senator's employer -- influence the decisions around these cases? >> i do not believe that was part of the inquiry. >> what you ask those westerns in the future? >> if appropriate, we will certainly do so. it's appropriate. >> mr. chairman, i'm troubled by some on this committee who seem toane irs.

by the disagreement, i think we all know this is a nation of laws and we abide by those laws were not to our peril. whether we agree with citizens united were not should not be justification for this agency, charged with upholding the rule of law equitably for all people in all groups, regardless of party affiliation or motives. mr. miller, i was troubled by her, and that he found this grouping -- i was troubled by your comment that you found this grouping to the inappropriate but not illegal. you can give if me examples of other targeting within the irs that you are aware of that would be inappropriate but not illegal.

>> i probably should tell you is my don't know -- it belief that what happened here was not illegal but i suppose there are some facts that might come out that would indicate otherwise. that is not my area. i don't know but it was certainly inappropriate. no question about that. we have used listings elsewhere. credit counseling organization would be one of those used to pull those cases together to work in a consistent and fair manner. correct the time is expired. ms. jenkins is recognized. .> thank you we have heard a lot of outrage, anger and disappointment. after sitting here for a couple hours, i am sad and sick to my stomach. the americans could be targeted by a government agency based on their political beliefs. mr. miller, in response to

congressman, you mentioned you had a discussion with someone at treasury. i was wondering if you can give us more details about when that conversation took place.

good morning, c-

,> as to your syrian question a couple of general responses. , one of theeasons primary reason secretary kerry went to moscow to meet with president clinton -- president putin was to talk about all of these issues and try to find some common ground between the russians and the u.s., some intersection of interest, because we all have interests in the middle east. everybody knows this is very

dangerous. what we do not want to see happen, the russians do not want to see happen is for syria to interrupt to the point where we well may find a regional war. we continue to work with the russians on their interests. everything we can do to in thee the powers region to be careful with escalation of military options and equipment. we will continue to work through that. this is complicated. i think i would leave my answer that way. at the very least,

it is an unfortunate decision that will embolden the regime and prolong the suffering. it is ill-timed and very unfortunate. which're talking about missiles, the anti-ship missiles? >> yes. >> the russians have made clear that they will keep delivering missiles in accordance with an arms treaty they made years ago. how does that chain, and particularly i'm thinking about 300 and defense system, how does that change your decision about arming the rebels, and how does that complicate your planning for all the military contingencies? for every military contingency, as you know, and every option. as general dempsey said, the in theion of weaponry

middle east is dangerous. we are working with our partners in that area as well as other countries to make sure that whatever influence we have, that that does not continue. general dempsey made it very clear on the specific areas of the missiles and whatever else is involved with the russians does not help. it makes it more dangerous. to summarize my thoughts on everywe continue to keep option open, as the president has said it we are already doing a lot -- has said. we are already doing a lot in syria on the humanitarian side, the nonlethal side.

we are continuing to try to bring some consensus, all the ofntries involved, and a lot the conversation with prime minister erdogan yesterday and their entire delegation was about this issue. is that toy opinion de-escalate, to find some common that seriousure does not disintegrate in the middle east erupt into a toional war, we continue keep every option open in what every further action we may take, but also with working with other players here. >> working on the shorter ship missile hyssop -- missile capability and the sa300 -- higher altitude, longer-range,

multiple tracking capability. it increases risk. not impossible to overcome. what i really worry about is that assad will try -- decide once he's got these systems, that he somehow safer, more prone to miscalculation. an unfortunate decision. >> 100 days since the hunger strike began at guantánamo. can you fill us in on what the department has done or military has been to address some of their concerns? what is being done to try to end the hunger strike? >> first, we have a responsibility, an inevitable responsibility, to assure the health and well-being of every

.etainee certainly, we are doing everything we can to do that. as you know, president obama noted a couple of weeks ago that he is going to come back, and he's in a process of that now, to find some resolution to guantánamo. , the military's role, is being handled with as much responsibility as we should and need to, with our detainees. will ask general dempsey apiece he's got any other -- generalut dempsey if he's got any other thoughts, but we do need a resolution to this. the president has said this, and he is working towards it. >> united states military

guards guantánamo. our sponsor ability is clear -- the safety and well-being of the prisoners, both themat is our j. that is what we are doing. the rest of this is policy decisions. >> you talked a little bit about earlier looking at the various congressional proposals on sexual assault. to follow-up on justin, the you at this point support senator gillibrand's- legislation to take sexual assault and battery cases out and put them in the hands of prosecutors as opposed to the chain of command, and what you think about the new proposal from senator blumenthal about creating a victims compensation fund? >> i've spoken to all of those senators and number of times, as many of our leaders have, on

their proposals. we are working with their staffs on all their proposals. we are talking to all the members of congress, both the house and senate. i get two more conversations this afternoon on their proposals. -- we all dothis -- accommodating house and senate members and working with them on what we think is workable, giving them our best .ssessment they are listening. they are giving us that opportunity. we are not taking any position on any bill -- this is our favorite bill or this is not -- we looking for components of all the legislation that we think makes sense -- make sense. i would also say, going back to what i noted earlier about congressionally mandated panels,

i would hope that we would have some time, everyone would have some time, to listen to what the panel comes back with. this was a congressionally mandated panel. give them some time to go in and assess the problem. why do we have a problem? how can we prevent the problem? what should we be doing better? it may well end up that those recommendations are exactly with -- are exactly the same with what one or two of the senators have proposed in their bills. actually in receipt of a letter from senator levin and in-house -- inhofe, asking me to provide my military advice on the specifics of those bills. i will communicate with them before i communicate with you. >> mr. secretary, you've talked a lot about the concept of

accountability, but this is not a new problem in the military. this has been going on for military women for some time. what is your philosophy, your decision-making about accountability? when do you hold somebody accountable, and with respect to ,oth of you, the joint chiefs as an organization, they are in charge of training, and they know this problem has been going on for many years now -- when do you hold somebody accountable at the senior level for not getting the job done as you would if there was a major life or loss, racism, attacks against gays? a quick follow for general dempsey on syria -- given what you said about your fear of a wider war, do you recommend that syrians be stopped s300?rily from get the

>> i think when you come at this, as you noted specifically focused on accountability -- i i the way, it isn't just applicable to this issue, but everything in life -- if you do not have accountability, you do not have much. in fact, our constitution, our government was founded on accountability. that's why we have three coequal branches of government. in everyre looking at way, many of the directors -- directives i have given this , weretwo weeks ago focused, if not every one of them, run some element of accountability at every chain of command. the division commander is in charge of that command. regardless of if there is a brigade commander or anything else -- that connection has to work all the way up and down the

line. we are looking at how we can do that better. one of the reasons we are going back and re-certifying everybody that i talked about earlier, the directive i gave todaycommand, t accountability. the president talked about it. it is on e central component that somehow -- on essential component that somehow has broken down. it's a central part of how we fix the problem. there are other pieces as well. theccountability in military on the issue of sexual assaults against military women and men, it seems to me -- that's an extraordinary thing for defense -- a secretary defense to knowledge, the lack of accountability. what are you doing about it? >> i responded in the general sense of your question, accountability -- the accountability of any

institution, especially with discipline of the military -- i will let general dempsey has devoted 39 years of his life to this -- if any component of that breaks down, if it is lacking anywhere, then there's going to be a problem. of course there is accountability in the military or we would not have a military. the chairman couldn't make decisions and combatant .ommanders to not give orders of course there is accountability. i was referring to the specific area of what has broken down in sexual assaults starting with reporting. the follow-through of that after. of course, that is a key part of anything to get to a resolution, how do you fix it,? starting with some questions by victims, if they do not feel their commanders were accountable enough to be able to come forward and register a

complaint, filed a complaint, because they felt they would be things, which is true, which has happened, and then also having no confidence that anything would be done about their complaint. at is what i was referring to. be addressed, as well as all the components of this. first of all, they do not have these weapon systems. syria does not have control of them. ,f they have control of them there are several capabilities that serious -- syria has not used. chemicals, long-range rocket, or air defense. the things in their control, we have options to deal with that.

in anyot have options way to prevent the delivery of them. i didn't say we couldn't. i said, we do not have options to prevent the delivery of any military sales to the syrians. >> on syria, could you both update us -- you mentioned the humanitarian assistance -- has there been any change in the thinking of providing legal assistance to the rebels, and also general dempsey, did you clarify -- you were talking about bob's question on the war and any impacts that might have on sexual assaults -- you said the military may have become a little bit too forgiving and they see somebody walking in with war medals -- have you seen specific instances of that happening? presumably you have more clarity on individual cases. have you seen that? what turns a know

.anel as it deliberates you are not afforded the opportunity to go back and scrutinize it, but what i am suggesting is after 10 years of war, there is the potential that we should examine whether we become a little bit bit too forgiving, not just of sexual harassment, sexual assault, but other forms of misconduct as well. what you are hearing me expressing is the commitment to try to gain a deeper understanding -- deeper understanding. my instinct suggests that 10 years of war might be a factor. >> the answer is we continue to look at every option. we will, we have to. every option is on the table. thank you very much.

>> next, a house ways and means committee hearing on how the irs handled tax exempt investigations for conservative groups. live at 7:00 a.m., your calls and comments on "washington journal." garfield, creature of friends, was an educated woman and a believer in women's rights. front james garfield's porch campaign for president, she reluctantly played the role of hostess for her husband. what he was assassinated, she returned to ohio and ensure his legacy by making their home into an early version of a

presidential library. we will look at the life of first lady lucretia garfield and that of mary arthur mcelroy. join our conversation about the lives of first lady's live at monday night at 9:00 eastern on c-span, c-span 3, c-span radio, and at c-span.org. >> outgoing irs commissioner steve miller told congress that foolish mistakes were made by the tax agency, but they were not motivated by partisanship. he was referring to revelations that some conservative groups were targeted in filing for nonprofit status good and treasury department regulator testifying the same hearing evidenceid not find that irs decisions were motivated by politics. this portion is an hour and 40 minutes.

>> the meeting will come to order. on may 10 the director of internal revenue service division that oversees tax exempt group acknowledged that the agency was targeting political leaning organizations. four days later they confirmed that "the i.r.s. used inappropriate crier the to identify political organizations applying for status." this began as far back as 2010. this goes against the principles of free speech and liberty upon in which this country was founded.

the disregard that the agency has treated congress and the american taxpayer raises serio'. based on the report, we know for an 18-month period i.r.s. employees employed key words to target applications for tax exempt status. these groups were subjected to further investigations. i.r.s. employees expanded their search to include groups about government spending, debt, taxes, the constitution, the bill of rights, or trying to "make america a better place to live." let me repeat that. people were targeted for making america a better place to live. these americans had their applications delayed for nearly

three years. 98 applicants were asked for improper information such as donor list and if family memrs were planning to run for political office. during that delay, other applications with names like progress and progressive were approved in a matter of months. the headline in "u.s.a. today" says it all. i.r.s. gave liberals a pass, tea party groups put on hold. some those cases should have been set aside due to concerns of their related political activity but no such review was done. i enter the "u.s.a. news today" report into the record. the i.r.s. officials knew about this since 2011. despite a two-year long investigation by this committee, the i.r.s. never told the

american people or their representatives about this simple truth. we were told no such targeting was happening, that is not just being misled, that is lying. we know the truth, at least some of it. we know these revelations are just a tip of the iceberg. it would be a mistake to treat this as one scandal. this maybe the one generating headlines but i count five violations of taxpayer right, the right to be treated fairly, impartially by their government. a white house official discussed the status of a private company, the tax status of a private company. second, in june of 2010 the targeting began. the i.r.s. started to threaten

donors that they were liable for certain taxes. in march of 2012 the huffington post published the donor list for organization of marriage. unlikely the final transition it was announced that i.r.s. leaked confidential applications from conservative groups. mr. miller, with all due respect this abuse cannot be fixed with one or two resignations. the reality is this is not a personnel problem. this is a problem of the i.r.s. being too large, too powerful, too intrusive, and too abusive of honest, hard working taxpayers. there isn't a person that i come into contact at home or anyone in this country that does not fear the i.r.s. they fear getting something wrong on their tax filing. they fear the i.r.s.'s ability

to audit them and wreak havoc in their lives. they are all -- only trying to make their lives better and make america better. every group in america is at risk. i'm sure your aware of the saying the power to tax is the power to destroy. under this administration, the i.r.s. has abused its power to tax and has destroyed what little faith the american people had in getting a fair shake in washington. this will not stand. trimming benches will not save the tree when the roots are rotten. only then will the american people get a tax system that treats them fairly and honestly as they deserve.

that is larger discussion it is tied to the issue before us today. how and why our tax system has gone so far off track. who started the targeting? who knew? when did they know? how high did it go? who leaked the private taxpayer information? why were the names of donors asked for and what was done with the lists before they were supposedly discarded? when did the administration know about each of these and what was the reaction? listening to the news this appears to be the latest example of cover-ups in this administration. it seems like the truth is hidden from the american people long enough to make it through an election. the american people have a right to the truth, a government that delivers the facts good or bad.

president obama promised to be different and deliver a better government, the most transparent in history. he was right. america deserves better. it is time to end the corruption at the i.r.s. and fix tax code that allows washington and the i.r.s. to pick who wins and who loses in america. i expect nothing less than the cooperation from the i.r.s. i recognize ranking member levin for his opening statement and thank for his commit to pursue this issue. >> thank you, mr. chairman. i'm going read my opening statement. i will expand on it a bit now that i heard the opening statement of the chairman. this committee on a bipartisan basis takes seriously its oversight role and we're fully

committed to ensure an i.r.s that serves the american people that serve an i.r.s. the americna people fairly and efficiently. what is now completely clear is that the management and oversight of the agencies tax applications have completely failed the american people. i emphasize that. as we know from the inspector general's audit, the agency used inappropriate criteria in its review of tax exemption applications. singling out organizations based on their names or political views rather than their actual activities. these criteria changed four times over two years with little management review or oversight. applications for years, work stopped for 13 months while one

department waited to hear back from another. questions were asked that were not necessary. again, no oversight, no accountability. all of us are angry at this on behalf of the nation. we are determined to get answers to our questions about how this happened to ensure that it does not happen again. finally, throughout this time, the i.r.s. leadership has demonstrated a disregard for the oversight role of the congress and this committee. former i.r.s. commissioner testified in front of us in march 2012 and said that "no targeting" was going on. two months later he was briefed on the i.g.'s investigation and

was fully informed that indeed singling out by name had occurred on his watch. he had an obligation to return to this committee and set the record straight so did mr. miller. neither fulfilled their obligations. a little more than a week ago, lois learner was in front of our committee. she has been directly involved in this matter. yes, she failed to disclose what she knew to this committee, choosing instead to do so at a conference two days later. this is wholly unacceptable. one of the reasons that we believe, as i stated several days ago, she should be relieved of her duties. chairman camp and i put together